Q1 2024 Voya Financial Inc Earnings Call

Good morning, welcome to Voya financials first quarter 'twenty 'twenty four earnings conference call. All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

Operator: Good morning. Welcome to Voya Financial's first quarter 2024 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star two. Participants are limited to one question and one follow-up. Please note this event is being recorded. I would now like to turn the call over to Mike Katz, Executive Vice President of Finance. Please go ahead.

After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star two participants are limited to one question and one follow up. Please note. This event is being recorded I would now like to turn.

The call over to Mike Katz Executive Vice President of Finance. Please go ahead.

Michael Robert Katz: Thank you and good morning. Welcome to Voya Financial's first quarter 2024 earnings conference call. We appreciate all of you who have joined us this morning.

Michael Robert Katz: Thank you and good morning, welcome to Voya financials first quarter 2024 earnings Conference call. We appreciate all of you who have joined US This morning.

Michael Robert Katz: As a reminder, materials for today's call are available on our website at investors.voya.com. Turning to slide two, some of the comments made during the call may contain forward-looking statements or refer to certain non-GAAP financial measures within the meaning of federal securities law. GAAP reconciliations are available in our press release and financial supplement, which can be found on our website.

Michael Robert Katz: As a reminder, materials for today's call are available on our website at investors Voya Dot com.

Michael Robert Katz: Turning to slide two some of the comments made during the call may contain forward looking statements will refer to certain non-GAAP financial measures within the meaning of federal Securities Law GAAP Reconciliations are available in our press release and financial supplement found on our website now joining me on.

Michael Robert Katz: Now, joining me on the call are Heather Lavallee, our Chief Executive Officer, and Don Templin, our Chief Financial Officer. After their prepared remarks, we will take your questions. For the Q&A session, we have also invited the heads of our businesses, specifically Matt Toms, Investment Management, and Rob Grubka, Workplace Solutions. With that, let's turn to slide three, as I would like to turn the call over to Heather.

Speaker Change: On the call are have little Valley, our Chief Executive Officer, and Don Templin, Our Chief Financial Officer. After their prepared remarks, we will take your questions for the Q&A session. We have also invited the heads of our businesses, specifically, Matt Toms investment management and Rob <unk>.

<unk> solutions with that let's turn to slide three as I would like to turn the call over to Heather.

Heather Hamilton Lavallee: Good morning, and thank you for joining us today. As you can see from our first quarter highlights on slide four, we delivered on our financial targets. Adjusted Operating EPS was $1.77, up 23% year over year, and we remain on track to deliver our full year 2024 EPS target of $8.25 to $8.45. We generated excess capital of approximately $200 million and returned more than that amount to shareholders in the form of share purchases and dividends. Our board has approved an additional $500 million share repurchase authorization that will allow us to execute on our capital return plan.

Heather: Good morning, and thank you for joining us today.

Speaker Change: As you can see from our first quarter highlights on slide four we delivered on our financial targets.

Speaker Change: Adjusted operating EPS was $1 77 up 23% year over year, and we remain on track to deliver our full year 2024, EPS target of $8 25 to.

Speaker Change: The $8 45.

Speaker Change: We generated excess capital of approximately $200 million and returned more than that amount to shareholders in the form of share repurchases and dividends.

Speaker Change: Our board has approved an additional $500 million share repurchase authorization that will allow us to execute on our capital return plan.

Speaker Change: Our capital plan includes the generation and return to our shareholders of $800 million of excess capital in 2024.

Heather Hamilton Lavallee: That capital plan includes the generation and return to our shareholders of $800 million of excess capital in 2024. Strong sales momentum and positive flows this quarter have us well on track to achieve our commercial and revenue targets for 2024. We are maintaining strong discipline on spend to enhance margins while preserving the investments that will sustain our long-term growth. And we continue to deliver an attractive return on equity, reflecting the achievement of our earnings targets and the capital efficiency of our businesses. Turn to slide five.

Speaker Change: Strong sales momentum and positive flows this quarter have us well on track to achieve our commercial and revenue targets for 2024.

Speaker Change: We are maintaining strong discipline on spend to enhance margins, while preserving the investments that will sustain our long term growth.

Speaker Change: And we continue to deliver an attractive return on equity, reflecting the achievement of our earnings targets and the capital efficiency of our businesses.

Speaker Change: Turning to slide five we are.

Heather Hamilton Lavallee: We are executing our strategy with competitive advantages that establish our clear right to win. As one of the few players in the market with leading positions in both retirement and group benefits, we have a distinct ability to succeed with our workplace benefits and savings strategy. We have scale and credibility across markets, tax codes, and employer sizes. We have distribution through virtually every intermediary channel, providing a diversified platform to grow revenues and add participants.

Speaker Change: We're executing our strategy with competitive advantages that established a clear right to win.

Speaker Change: That's one of the few players in the market with leading positions in both retirement and group benefits, we have a distinct ability to succeed with our workplace benefits and savings strategy.

Speaker Change: We have scale and credibility across markets tax codes and employer sizes.

Speaker Change: We have distribution through virtually every intermediary channel, providing a diversified platform to grow revenues and add participants.

Heather Hamilton Lavallee: And we have a leading brand in the marketplace, with a reputation for putting the customer first and for a culture of service. I will mention just a few examples of how our workplace strategy is landing new clients, expanding our revenue base, and deepening our relationships with customers. In retirement, we've evolved the way we approach the mid-market, where customers have different needs and expectations from those in smaller and larger market segments. Our efforts are yielding results, with mid-market sales up almost 300% over the same time last year.

Speaker Change: We have a leading brand in the marketplace with a reputation for putting the customer first and for our culture of service.

Speaker Change: I will mention just a few examples of how our workplace strategy is landing new clients, expanding our revenue base and deepening our relationships with customers.

Speaker Change: In retirement, we've evolved the way we approach the mid market, where customers have different needs and expectations from those in smaller or larger market segment. That's R.

Speaker Change: Our efforts are yielding results with mid market sales up almost 300% over the same time last year.

Heather Hamilton Lavallee: In Stop Loss, we've added new quoting capabilities and expanded our distribution reach to smaller employers who are increasingly self-funding their medical plans. This has contributed to the 17% growth of in-force premiums and fees we achieved in Health Solutions as compared to last year.

Speaker Change: And stop loss, we've added new quoting capabilities and expanded our distribution reach to smaller employers who are increasingly self funding their medical plans.

Speaker Change: This contributed to the 17% growth of in force premiums and fees, we've achieved in health solutions as compared to last year.

Speaker Change: And we're deepening our relationships with our participants, creating new opportunities to drive revenues from our rapidly increasing participant base.

Heather Hamilton Lavallee: And we're deepening our relationships with our participants, creating new opportunities to drive revenues from a rapidly increasing participant base. As we surpass 7 million participant accounts on a retirement platform, we are strengthening our field-based retail advisory team to capture a greater share of economics out of the plan. We're also growing our managed account business with managed account revenues of 27% in the first quarter of 2024. Our workplace strategy is building deeper relationships with our customers and creating new sources of growth for our business. Moving to slide six.

Speaker Change: As we surpassed 7 million participant accounts on our retirement platform. We are strengthening our field base retail advisory team to capture a greater share of economics out of plan.

Speaker Change: We're also growing our managed account business with managed account revenues up 27% in the first quarter of 2024.

Speaker Change: Our workplace strategy is building deeper relationships with our customers and creating new sources of growth for our business.

Speaker Change: Moving to slide six and.

Heather Hamilton Lavallee: In investment management, our competitive advantage begins with a well-established foundation in institutional fixed income and leading market positions in third-party insurance asset management and income solutions. Our strength in private assets and our global distribution reach create expansion opportunities that build upon this platform for growth. With a scaled presence in international markets, our investment strategies meet the increasing demand for U.S. denominated assets, with strong investment performance and an established market presence. We are well positioned to capture flows as asset rotations increase. We're seeing these flows begin to emerge, with $1.3 billion in insurance channel net flows in the first quarter.

Speaker Change: In investment management, our competitive advantage begins with a well established foundation in institutional fixed income and leading market positions in third party insurance asset management and income solutions.

Speaker Change: Our strength in private assets and our global distribution reach create expansion opportunities that build upon this platform for growth.

Speaker Change: With scaled presence in international markets, our investment strategies meet the increasing demand for U S denominated assets.

Speaker Change: With strong investment performance in an established market presence we.

Speaker Change: We are well positioned to capture flows as asset rotations increase.

Speaker Change: We're seeing it just flows begin to emerge with $1 $3 billion in insurance channel net flows in the first quarter.

Speaker Change: And privates at all we're executing our expansion strategy with three private fund launches planned this year.

Heather Hamilton Lavallee: And private equity and alternative investments, we're executing our expansion strategy with three private fund launches planned this year. We've also strengthened our distribution team with further private markets expertise to help us meet new client demand. And our growth in international markets continues with international retail flows of $1.3 billion for the quarter. Turning to slide seven.

Speaker Change: We've also strengthened our distribution team with further private markets expertise to help us meet new client demand.

Speaker Change: And our growth in international markets continues with international retail flows of $1 $3 billion for the quarter.

Speaker Change: Turning to slide seven.

Donald C. Templin: Voya's purpose and vision continue to drive positive outcomes for our clients, our colleagues, and the communities in which we live and work. For our customers, we continue to roll out our MyVoyage guidance tool to help employees choose the right benefits and savings options to meet their personal circumstances and improve their financial outcomes. Customers who use MyVoyage are 50% more likely to choose a less expensive health plan option and 50% more likely to elect to save funds in a health savings account while increasing their retirement savings rate.

Speaker Change: Boys purpose and vision continue to drive positive outcomes for our clients our colleagues and the communities in which we live and work.

Speaker Change: For our customers, we continue to rollout our my voyage guidance tool to help employees choose the right benefits and savings options to meet their personal circumstances and improve their financial outcomes.

Speaker Change: Customers, who use my voyage are 50% more likely to choose a less expensive health plan option.

Speaker Change: And 50% more likely to elect to save funds and a health savings account, while increasing their retirement savings rates.

Donald C. Templin: In our communities, we are working to advance financial literacy among young people. Through a partnership with the Council for Economic Education, we are sponsoring the National Personal Finance Challenge and continue to support advocacy for positive legislative change in this area. With respect to our colleagues, I'd like to highlight a recent achievement that involved almost 2,000 Voya employees, those who work at Voya India. In April, we completed the final step in our operational separation from our joint venture partner, creating powerful new opportunities for greater innovation and collaboration among our teams. For that reason, Don will now provide more details on our performance and results. Don?

Speaker Change: For our communities, we are working to advance financial literacy among young people.

Speaker Change: Through our partnership with the Council for economic Education, we are sponsoring a national personal finance challenge and continue to support advocacy for positive legislative change in this area.

Speaker Change: With respect to our colleagues I'd like to highlight a recent achievement that involved almost 2000 employees those who work at Voya, India and.

Speaker Change: In April we completed the final step in our operational separation from our joint venture partner.

Speaker Change: Creating powerful new opportunities for greater innovation and collaboration among our teams. So that Dan will now provide more details on our performance and results Don.

Dan: Thank you Heather.

Donald C. Templin: Now let's turn to our results on slide 9. We delivered $1.77 of adjusted operating earnings per share in the first quarter compared with $1.44 a year ago. Our first quarter results reflect the benefit of diverse revenue sources and strong expense discipline. Fee revenues were higher across all businesses, which more than offset lower underwriting income and health, as loss ratios normalized from exceptionally favorable levels. First quarter gap net income was $234 million.

Dan: Now, let's turn to our results on slide nine.

Dan: We delivered $1 77 of adjusted operating earnings per share in the first quarter compared with $1 44, a year ago.

Dan: Our first quarter results reflect the benefit of diverse revenue sources and strong expense discipline.

Dan: Fee revenues were higher across all businesses, which more than offset lower underwriting income and health as loss ratios normalize from exceptionally favorable levels.

Dan: First quarter GAAP net income was $234 million net.

Donald C. Templin: Net income exceeded adjusted operating earnings in the quarter due to the impact of several non-cash items, including a $38 million tax benefit. Robust cash generation and a strong capital position supported the return of capital to shareholders. Excess capital generation for the quarter was approximately $200 million, consistent with our track record of generating capital above our 90% target. We remain on track to deliver $8.25 to $8.45 of adjusted operating EPS in 2024.

Dan: Net income exceeded adjusted operating earnings in the quarter due to the impact of several noncash items, including a $38 million tax benefit.

Dan: Robust cash generation and a strong capital position supported the return of capital to shareholders.

Dan: Excess capital generation for the quarter was approximately $200 million consistent with our track record of generating capital above our 90% target.

Dan: Yeah.

Dan: We remain on track to deliver $8 25 to $8.45 of adjusted operating EPS in 2024.

Donald C. Templin: And we also remain on track to generate and return $800 million of excess capital to shareholders. Turning to Wealth Solutions on slide 10. We continue to improve outcomes and deliver value for our customers, consistent with our vision and values. This is supporting our ability to consistently grow assets and our participant base. Full service net inflows were $22 million in the first quarter, a significant improvement quarter over quarter. We expect momentum to build in the second half of the year, resulting in full service net inflows of over $1 billion in 2024. In record keeping, net outflows were 312 million in the quarter, following a year in which net inflows were over $7 billion.

Dan: And we also remain on track to generate and return $800 million of excess capital to shareholders.

Dan: Turning to wealth solutions on slide 10.

Dan: We continued to improve outcomes and deliver value for our customers consistent with our vision and values.

Dan: This is supporting our ability to consistently grow assets and our participant base.

Dan: Full service net inflows were $22 million in the first quarter, a significant improvement quarter over quarter.

Dan: We expect momentum to build in the second half of the year, resulting in full service net inflows of over $1 billion for 2024.

Dan: And recordkeeping net outflows were $312 million in the quarter following a year in which net inflows were over $7 billion.

Dan: Larger planned activity can drive variability in quarterly net cash flows.

Donald C. Templin: Larger plan activity can drive variability in quarterly net cash flows. Our full year outlook is over $3 billion in record-keeping net inflows. Moving to slide 11.

Dan: Our full year outlook is over $3 billion in recordkeeping net inflows.

Dan: Moving to slide 11.

Donald C. Templin: Wealth Solutions generated $186 million of adjusted operating earnings in the first quarter, a more than 40% increase year over year. Higher fee-based revenues and alternative investment income more than offset lower spread-based revenues. And our continued focus on expense discipline, balanced with investing in the business, resulted in administrative expenses of $17 million, or 7% lower than the prior year quarter.

Dan: Wealth solutions generated $186 million of adjusted operating earnings in the first quarter, a more than 40% increase year over year.

Dan: Higher fee based revenues and alternative investment income more than offset lower spread based revenues.

Dan: And our continued focus on expense discipline balanced with investing in the business resulted in administrative expenses, which were $17 million or 7% lower than the prior year quarter.

Dan: Looking ahead, we expect full year net revenues in 2024 ex notables to be 1% to 2% higher than 2023.

Donald C. Templin: Looking ahead, we expect full-year net revenues in 2024 X notables to be one to 2% higher than 2023. While we took actions in the first quarter to enhance portfolio yields and improve interest income on cash balances, second quarter spread income is expected to be between $220 million and $230 million as spread-based assets continue to trend lower.

Dan: While we took actions in the first quarter to enhance the portfolio yields and improve interest income on cash balances.

Dan: Second quarter spread income is expected to be between $220 million and $230 million spread based assets continue to trend lower.

Dan: And we also introduced new money products that we expect will increase inflows into the general account and stable value products overtime.

Donald C. Templin: And we also introduce new money products that we expect will increase inflows into the general account and stable value products over time. Turning to slide 12, on health solutions. We continue to grow our core business, expand into adjacent markets, and drive greater adoption and utilization of our solutions within the workplace. Growth in the first quarter was driven by a record sales season and favorable retention across all product lines. Annualized in-force premiums and fees grew 17% to $3.9 billion, well above our target. Premium growth was largely driven by stop loss, where we improved our capabilities to quote new plans, as well as enhanced our distribution down market. In the first quarter, our total aggregate loss ratio was 74%.

Dan: Yeah.

Dan: Turning to slide 12 on health solutions.

Dan: We continued to grow our core business expand into adjacent markets and drive greater adoption and utilization of our solutions within the workplace.

Dan: Growth in the first quarter was driven by record sales season, and favorable retention across all product lines.

Dan: Annualized in force premiums and fees grew 17% to $3 9 billion well above our target.

Dan: Premium growth was largely driven by stop loss, where we improved capabilities to new plans as well as enhanced our distribution down market.

Dan: In the first quarter, our total aggregate loss ratio was 74%.

Dan: In stop loss results reflect updated experience for our 2023 block, which is nearing completion and is expected to finish at the high end of our 70, 780% target loss ratio range.

Donald C. Templin: In stop loss, results reflect updated experience for our 2023 block, which is nearing completion and is expected to finish at the high end of our 77 to 80% target loss ratio range. Looking forward, updated results from our 2023 block and pricing metrics related to the strong enforced premium growth suggest it is prudent to expect we will finish the year on the high end of our 69 to 72 percent aggregate loss ratio range.

Dan: Looking forward.

Dan: Data results from our 2023 block and pricing metrics related to the strong enforced premium growth.

Dan: Suggested is prudent to expect we will finish the year.

Dan: On the high end of our 69% to 72% aggregate loss ratio range.

Dan: Moving to slide 13.

Donald C. Templin: Moving to slide 13, Health Solutions' adjusted operating earnings of $59 million reflect strong book growth, offset by loss ratios normalizing from historically favorable levels in 2023. Net revenue growth year over year reflects strong sales, favorable retention, and diversification into Fee-Based Revenue. The adjusted operating margin X notables was 25.4% on a trailing 12 month basis, and we expect it to be at the lower end of the 24 to 30% target range for the full year.

Dan: Health solutions adjusted operating earnings of $59 million reflect strong book growth offset by loss ratios normalizing from historically favorable levels in 2023.

Dan: Net revenue growth year over year reflects strong sales.

Dan: <unk> retention and diversification into fee based revenue.

Dan: The adjusted operating margin ex notables was 25, 4% on a trailing 12 month basis, and we expect it to be at the lower end of the 24% to 30% target range for the full year.

Dan: This reflects both our full year underwriting expectations as well as continued discipline on managing expenses, while investing in growth.

Donald C. Templin: This reflects both our full-year underwriting expectations as well as continued discipline on managing expenses while investing in growth. Growth examples include investing in lead management. This capability is of increasing importance to employers and often influences decisions to bundle supplemental, life, and disability products.

Dan: Both examples include investing in lead management.

Dan: This capability is of increasing importance to employers and often influences decisions to bundle supplemental life and disability products.

Dan: Additionally, we are continuing to enhance key capabilities within benefits administration to support growth in 2025 and beyond.

Donald C. Templin: Additionally, we are continuing to enhance key capabilities within benefits administration to support growth in 2025 and beyond. Moving to investment management on slide 14, with the international transition now behind us, we are seeing the results of our reach as a diversified global investment manager with an enhanced platform of investment solutions emerging. The diversity of our business across client type, client region, and asset class provides multiple paths to scale and grow.

Dan: Moving to investment management on slide 14.

Dan: With the international transition now behind US we are seeing the results of investment managements reach as a diversified global investment manager with an enhanced platform of investment solutions emerging.

Dan: The diversity of our business across client type.

Dan: That region and asset class provides multiple paths to scale and grow.

Dan: Our leading positions in institutional fixed income and third party insurance asset management service competitive advantages, which will support continued client and asset growth.

Donald C. Templin: Our leading positions in institutional fixed income and third-party insurance asset management serve as competitive advantages, which will support continued client and asset growth. We generated positive net inflows of $574 million in the first quarter. The first quarter included approximately $2 billion of flows generated in U.S. and international intermediary channels, reflecting demand for Income and Growth Solutions, our Retail Private Equity Fund, and Core Fixed Incomes. In institutional, industry headwinds and CLOs and softer demand for fundamental and thematic equities were partly offset by strong demand for core fixed income in the insurance channel.

Dan: We generated positive net inflows of $574 million in the first quarter.

Dan: First quarter included approximately $2 billion of flows generated in the U S and international intermediary channels, reflecting demand for income and growth solutions, a retail private equity fund and core fixed income.

Dan: In institutional the industry headwinds and clothes and softer demand for fundamental and thematic equities were partly offset by strong demand for core fixed income and the insurance channel.

Dan: Overall, we expect our positive net flows momentum to build throughout the year driven by strengthening investment performance.

Donald C. Templin: Overall, we expect our positive net flows momentum to build throughout the year, driven by strengthening investment performance, improving client sentiment across domestic insurance and retail channels, and increasing demand in the Asia-Pacific region for U.S. dollar-denominated solutions. Turning to slide 15.

Dan: Improving client sentiment across domestic insurance and retail channels.

Dan: And increasing demand in the Asia Pacific region for U S dollar denominated solutions.

Dan: Turning to slide 15.

Dan: Investment management delivered adjusted operating earnings of $42 million in the first quarter net of all Leon's Gis Noncontrolling interest.

Donald C. Templin: Investment management delivered adjusted operating earnings of $42 million in the first quarter, net of Allianz GI's non-controlling interest. Higher net revenue year over year reflects strong sales in the intermediary and insurance markets and benefits from favorable equity markets. Adjusted operating margin X notables improved meaningfully to 26.1%. The improvement reflects higher net revenue and the result of significant expense actions in 2023 and continued discipline this year. We are encouraged by the momentum early in the year, and we expect our diverse pipeline will support continued growth and flows and a return to 2% organic growth. Turning to slide 16.

Dan: Higher net revenue year over year reflects strong sales in intermediary and insurance markets and benefits from favorable equity markets.

Dan: Adjusted operating margin ex notables improved meaningfully to <unk> 26, 1%.

Dan: The improvement reflects higher net revenue and the result of significant expense actions in 2023 and continued disciplined this year.

Dan: We are encouraged by the momentum early in the year.

Dan: And we expect our diverse pipeline will support continued growth in flows and I returned to 2% organic growth.

Dan: Turning to slide 16.

Donald C. Templin: Our strong capital generation differentiates us from peers. We continue to build on our track record of generating excess capital above 90% of earnings while still investing for growth. In the first quarter, we generated approximately $200 million of excess capital and returned over $200 million to shareholders, including $172 million via share repurchases. We remain on track to generate over $800 million of excess capital in 2024, and longer term, we expect excess capital generation will grow in line with business growth. Turning to slide 17.

Dan: Our strong capital generation differentiates us from peers.

Dan: We continue to build on our track record of generating excess capital above 90% of earnings while still investing for growth.

Dan: In the first quarter, we generated approximately $200 million of excess capital and returned over $200 million to shareholders, including $172 million via share repurchases.

Dan: We remain on track to generate over $800 million of excess capital in 2024.

Dan: And longer term, we expect excess capital generation will grow in line with business growth.

Dan: Turning to slide 17.

Donald C. Templin: We are focused on executing our strategy and meeting our financial targets for 2024. We continue to generate excess capital in line with our 90% plus free cash conversion, supported by our diverse and capital-light businesses. We expect to return over $800 million to shareholders in the form of share repurchases and dividends. First quarter earnings put us on track to meet our full year adjusted operating EPS target of $8.25 to $8.45. And the significant improvement in first quarter net flows supports the momentum we expect through the balance of the year. With that, I will turn the call back to the operator so that we can take your questions.

Dan: We are focused on executing our strategy and meeting our financial targets for 2024.

Dan: We continue to generate excess capital in line with our 90% plus free cash conversion supported by our diverse and capital light businesses.

Dan: We expect to return over $800 million to shareholders in the form of share repurchases and dividends.

Dan: First quarter earnings put us on track to meet our full year adjusted operating EPS target of $8 25 to.

Dan: To $8 45.

Dan: And the significant improvement in first quarter net flows supports the momentum we expect through the balance of the year.

Speaker Change: With that I will turn the call back to the operator, so that we can take your questions.

Speaker Change: Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you are using a speaker.

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speaker phone, please pick up your handset before pressing the keys.

Speaker Change: <unk> please pick up your handset before pressing the keys to withdraw your question Press Star two.

Speaker Change: <unk> participants are limited to one question and one follow up.

Operator: To withdraw your question, press star 2. As a reminder, participants are limited to one question and one follow-up. Our first question is from Mike Ward with Citigroup. Please proceed.

Speaker Change: Our first question is from Mike Ward with Citigroup. Please proceed.

Michael Augustus Ward: All right. All right. Hi, sorry about that. I was just wondering if you could maybe comment on the really strong sales growth that we saw in health. It just seemed like a very big number was up 50% excluding benefit focus.

Michael Augustus Ward: Alright, there is fine.

Michael Augustus Ward: Hi, sorry about that I was just wondering if you could maybe comment on the really strong sales growth that we saw in health.

Michael Augustus Ward: It just seemed like a very I think it was up 50%.

Michael Augustus Ward: Excluding the benefit focus.

Michael Augustus Ward: Yeah sure Mike. So we clearly had a really strong year to start and then as you do the comparable to last year I'd say, we felt like we were a little bit light so the year over year percentage impressive nonetheless.

Unknown Executive: Yeah, sure, Mike. So we clearly had a really strong year to start. And then as you compare it to last year, I'd say we felt like we were a little bit light. So the year over year percentage is impressive, nonetheless.

Unknown Executive: But you know, look, I think it's really a testament to the work the team does from an execution standpoint across all of our products. I think the distribution depth and breadth has just continued to build. I would also say, you know, as we think about bringing benefit focus into the mix, that's only gotten better; our relevance at the workplace, our relevance with distribution partners, has only increased, the touches have only increased.

Mike: But look I think it's really a testament to the work that <unk> does from an execution standpoint across all of our products.

Mike: <unk>.

Mike: Distribution depth and breadth has just continued to build.

Mike: Also say.

Mike: As we think about bringing benefit focus into the mix.

Mike: That has only gotten better our relevance at the workplace, our relevance with distribution partners as <unk>.

Mike: Only increase the touches has only increased and I think bill what do you do.

Unknown Executive: And I think if we can bring credibility to everything we're doing across the workplace, we're in as good a position as anybody to take advantage of what we think is a really unique opportunity to solve problems in a different way. But look, we, you know, obviously, you take the step back, and you want to make sure it was disciplined growth. I'm sure we'll talk more about that as we go, but we feel good about how we started the year. And we'll continue to be disciplined as we think about moving forward.

Mike: <unk> credibility to everything we're doing across the workplace, whereas in good a position as anybody.

Mike: To take advantage of what we think is a really unique opportunity to solve problems in a different way, but look we obviously you do the step back and you want to make sure it was disciplined growth I'm.

Mike: I'm sure, we'll talk more about that as we go but we feel good about how we started the year and we will continue to be disciplined as we think about moving forward.

Heather Hamilton Lavallee: And Mike, this is Heather. If I can just build a finer point on the stop-loss sales and very strong growth. You know, two key points there are that we had expanded down market, and so we saw that contributing to the very favorable stop-loss sales. And we've also done some things to leverage AI and machine learning to be able to expand our quoting capabilities. Historically, we typically would have to decline about 50% of the one-on-one business that came in. And this new capability has allowed us to be able to bid on a larger percentage of opportunities, which has contributed to the favorable sales.

Mike: And Mike This is Heather if I can just felt a finer point on the stop loss sales.

Heather: Strong growth in two key points. There is that we had extended down market and so we saw that contributing to the very favorable stop loss sales and we've also done some things to leverage AI and machine learning to be able to expand our quoting capabilities. Historically, we typically would have to decline about 50% of the one one business that came in and.

Heather: So this new capability, it's allowed us to be able to bid on a larger percentage of opportunities, which has contributed to the favorable sales.

Speaker Change: Got it Super helpful. Thank you and then maybe on the outlook for flows and I guess more towards investment management, but.

Michael Augustus Ward: Got it. Super helpful. Thank you. And then maybe on the outlook for flows, and I guess more towards investment management, but retail fairly solid. Curious if maybe in 2Q today, you're seeing any indication that some of the institutional players might be looking to, I don't know, put some excess cash to work that could be maybe bolstering the outlook for inflows.

Speaker Change: Retail fairly solid.

Speaker Change: Curious if maybe in <unk> to date Youre seeing any indication that.

Heather: Some of the institutional players might be looking to put some excess cash to work that could be.

Heather: Maybe bolstering the outlook for her for inflows.

Speaker Change: Hey, Mike. Thanks for the question certainly encouraged by the turn it flows in the first quarter, we talked about an inflection point left.

Unknown Executive: Mike, thanks for the question. Certainly, they are encouraged by the turn in flows in the first quarter. We talked about an inflection point at the end of last year, and we've seen that inflection point in flows. And as you referenced, strong internationally and in retail markets domestically, we are seeing with the market environment, let me just categorize the market environment a bit, the lower rate volatility, even a higher rate, that lower volatility and the narrative around how persistent growth is, as opposed to whether the Fed has already killed growth, that's an environment where institutions are more likely to act.

Speaker Change: End of last year, and we've seen that inflection point and flows and as you referenced strong internationally and in the retail markets domestically we are seeing.

Speaker Change: With the market environment, let me just kind of categorize the market environment, a bit lower rate volatility even at a higher rate that lower volatility and the narrative around how persistent is growth as opposed to has the fed already killed growth. That's an environment where institutions are more likely to act. So when we look at our investment performance, which continues to be strong.

Unknown Executive: So when we look at our investment performance, which continues to be strong, and we look at a pipeline, which we referenced last quarter, again, still in place that $10 billion plus pipeline, we are quite competent on that organic growth rate, two plus percent. And we have seen, as we move into the second quarter, institutional activity improve. And we've used the word build in the past, and that visibility in the 2Q builds our confidence around achieving a two plus percent growth rate.

Speaker Change: We look at the pipeline, which we referenced last quarter again still in place that $10 billion plus pipeline. We are quite confident on that organic growth rate two plus percent and we have seen as we move into the second quarter institutional activity improve and we use the word build in the past and that visibility into two new builds our confidence around achieving that.

Speaker Change: Two plus percent growth rate.

Unknown Executive: And maybe two builds for me for Mazcom are to emphasize the point that the transition year is behind us. We recognize we still have work to do, but we do feel very good about the full year outlook. And secondly, if you look at the strong results we delivered in the quarter and the visibility we have into 2Q, we did that during a very successful leadership transition within asset management between Matt and Erik. And that speaks to really strong client confidence in Matt and the team.

Speaker Change: Maybe two builds for me for mass comment is to emphasize the point that the transition year is behind us.

Speaker Change: We recognize we still have work to do but we do feel very good about the full year outlook.

Speaker Change: And secondly is that if you look at the strong results, we delivered in the quarter and the visibility we have into two Q. We did that during a very successful leadership transition within asset management with both Matt and Eric and that speaks to really strong client confidence in Matt and the team.

Speaker Change: Our next question is from Ryan Krueger with key BW. Please proceed.

Ryan Joel Krueger: Our next question is from Ryan Krueger with KBW. Please proceed.

Unknown Executive: Hey, thanks, good morning. I had a follow-up on stop-loss. I guess first, can you provide some additional detail on what you think is driving the higher stop-loss claims? And then, just as a follow-up to the very strong sales, to what extent are you concerned that you may have underestimated the medical trend in your 2024 stop-loss pricing?

Ryan Joel Krueger: Hey, Thanks, Good morning, I had a follow up on stop loss I guess first can you provide some additional detail on what you think is driving the higher <unk>.

Ryan Joel Krueger: Stop loss claims and then just as a follow up to the very strong.

Speaker Change: Sales to what extent are you concerned that you may have underestimated the medical trend in your 2020 for stop loss pricing.

Speaker Change: Yes, I'll start with the first one from a <unk> perspective, what we saw driving velocity ratio. There was really the more complete nature of the 23 cohort of business.

Unknown Executive: You know, I'll start with the first one. From a 1Q perspective, you know, what we saw driving the loss ratio there was really the more complete nature of the 23 cohort of business. As you'll recall, last year, we had, excuse me, we started the year focused on and talking about during the year about the 22 block of business. And that cohort ran incredibly well, sort of starting the year was showing good results. And then it continued on in the second quarter and impacted what we were showing then. The 22 block, easy for me to say here, is running and ran at a low 70 percent.

Speaker Change: Youll recall last year, we had excuse me we started the year focused in and talking about during the year about the 2022 block of business.

Speaker Change: That cohort ran that incredibly well sort of start of the year was showing good results.

Speaker Change: And then it continued on into the second quarter and impacted what we were showing then the 'twenty three 'twenty two block easy for me to say here is running and ran at low 70%. So as we look at the 23 block and how that is finishing and how that impacted the quarter were ending up at the higher end of the range.

Unknown Executive: So as we look at the 23 block and how that is finishing and how that impacted the quarter, we're ending up at the higher end of the range. And so to connect to the second part of your question, we, you know, and Don said this in his comments, feel it's prudent to be at the higher end of the range. We'll see how that obviously plays out quarter to quarter and continue to guide and give you the best view of the underwriting margin, which we put into the modeling considerations to help bridge that gap.

Speaker Change: And so to connect to the second part of your question.

Speaker Change: And <unk> said this in his comments feel its prudent to be at the higher end of the range. We will see how that obviously plays out quarter to quarter and continue to guide and give you the best view into underwriting margin, which we put in the modeling considerations to help bridge that gap, but as you think about where we're at today versus where we were a year.

Unknown Executive: If you think about where we are today versus where we were a year ago, you've got two cohorts of business that are much tighter aligned from a loss ratio expectation perspective. Now, again, 24. We're just getting started.

Speaker Change: Ago, you've got two cohorts of business that are much tighter aligned from a loss ratio expectation perspective, now again 24, we're just getting started as we get into third and fourth quarter. Obviously, you have got much more experience to look at.

Unknown Executive: As we get into the third and fourth quarters, obviously, you've got much more experience to look at versus reserving. And so that dynamic of how the credibility builds versus reserving, that plays out in the back half of the year. But as we step back, things like, you know, lapse rates on the renewal activity we drove, the guidance that we set around renewal targets, and then new business pricing was at win rates that were consistent with the prior few years, a little bit better than last year, but consistent with the years before that. So with that, I'll pause and see.

Speaker Change: Versus reserving and so that dynamic of how the the credibility builds versus reserving that plays out at the back half of the year, but as we do the step back things lie.

Speaker Change: Lapse rates on renewal activity, we drove the guidance that we set around renewal targets and then the new business pricing was it win win rates that were consistent to the prior few years, a little bit better than last year, but consistent with the years before that so with that ill.

Unknown Executive: Yeah, I think that just one thing I would emphasize the examples that Rob was highlighting there is that we have a disciplined approach to how we price this business over the long term. And as you saw in the materials, we also have a very strong track record of growing this business while effectively managing the loss ratios over a long period of time. And we plan to continue to do that in the 24th book and going forward.

Speaker Change: Yes, I think just one thing I would build emphasize the examples that Rob was highlighting there is we have a disciplined approach to how we price this business over the long term and as you saw in the materials. We also have a very strong track record of growing this business, while effectively managing the loss ratios.

Speaker Change: For a long period of time, and we plan to continue to do that in the 'twenty four bucket going forward.

Speaker Change: Thanks that was helpful.

Ryan Joel Krueger: Thanks, that was helpful. Shifting to wealth, are you still seeing the same type of trends on somewhat elevated participant withdrawals? And then, if so, are there any actions you're trying to take to retain more of those assets, you know, within Voya?

Speaker Change: Shifting.

Speaker Change: Well.

Speaker Change: Are you still seeing the same type of trends on somewhat elevated participant withdrawals and then I guess, if so are there any actions you are trying to take to retain more of those assets within voya.

Speaker Change: Yes, sure so from a.

Unknown Executive: Yeah, sure. So from a participant behavior piece of it, I think consistent with how we guided at the end of last year, how we have seen things play out at the start of this year, our views really come to light when you think about both the net flow perspective and the guidance that we're giving you there. That's incorporated. And then also from a general account perspective and guiding you on the spread income, that's the most meaningful, you know, area to look for outcomes or the impact of that.

Speaker Change: Participant behavior piece of it I think consistent to how we guided at the end of last year, how we've seen things play out at the start of this year our views really most come to light. When you think about both net flow perspective, and the guidance that we're giving you. There. That's incorporated and then also from a general account perspective and guiding you on.

Speaker Change: Spread income that's the.

Speaker Change: Most meaningful area to look for for outcomes or the impact of that as we think about what we're trying to do again last quarter, we talked about new product introductions, So both general account and stable value product.

Unknown Executive: As we think about what we're trying to do, again, last quarter, we talked about new product introductions. So both general account and stable value product introductions are going to be happening or are happening. Those will build and help over time as we think about the decision and the actions that a consumer is taking. Obviously, it's a complex point in time when they're making those choices and decisions. We want to be there to provide thoughtful education, guidance, and potentially advice, depending on who they're working with within the Voya team.

Speaker Change: Introductions are going to be happening are happening.

Speaker Change: Those will build and help over time.

Speaker Change: As we think about.

Speaker Change: The decision and the actions that a consumer taking obviously, it's a complex point in time, when they're making those choices and decisions we want to be there to provide thoughtful education guidance and potentially advice, depending on who they are working with within the Voya team and again I'll turn it over had a color here to talk.

Unknown Executive: And again, I'll turn it over to Heather here to talk a little bit about retail and what we're doing and how we're thinking about that moving forward. Yeah, let me just add to that that, you know,

Speaker Change: A little bit about retail and what we're doing and how we're thinking about that moving forward.

Heather Hamilton Lavallee: Yeah, let me just add on that. The real point is we've got a strong retail wealth management business inside wealth. And today, we've got a combination of ways that we're going to deliver education and advice for our participants. We do take a holistic view of participant needs, and we've got a breadth of solutions to serve them both in plan and out of plan. We are, this is one of the areas when you hear Don talk about our investments and growth; we are continuing to invest in our capabilities to serve customers' needs out of plan.

Speaker Change: Yeah, Let me just add on that is that the.

Speaker Change: The real point is we've got a strong retail wealth management business inside wealth and today, we've got a combination of ways that we're going to deliver education and advice for our participants.

Speaker Change: We take a holistic view of participant needs and we've got a breadth of solutions to serve them both in planned and unplanned.

Speaker Change: This is one of the areas when you hear Don talk about our investments in growth, we are continuing to invest in our capabilities to serve customers' needs out of plan and it really links back to our purpose is to help our clients to and through retirement. So I would say on this one is stay tuned we'll continue to provide updates on how we are.

Heather Hamilton Lavallee: And it really links back to our purpose of helping our clients through and through retirement. So, you know, I would say on this one is, "stay tuned," we'll continue to provide updates on how we are continuing to expand our out of plan capabilities in support of our strong in plan capabilities within wealth.

Speaker Change: <unk> to expand our out of planned capabilities in support as well of our of our strong implant capabilities within well.

Speaker Change: Our next question is from Wes Carmichael with Autonomous research. Please proceed.

Wesley Collin Carmichael: Our next question is from Wes Carmichael with Autonomous Research. Please proceed.

Wesley Collin Carmichael: Hey, good morning, I had another one just on stop loss I think you mentioned being able to go down market price. Some smaller employers just curious if you think that that business is kind of accretive to margin on a relative basis you'd be kind of price those to a lower loss ratio or is it kind of similar to the enforce book.

Wesley Collin Carmichael: Hey, good morning. I had another one just on stop loss. I think you mentioned being able to go down market and price some smaller employers. I'm just curious if you think that that business is kind of accretive to margin on a relative basis, do you kind of price those to a lower loss ratio, or is it kind of similar to the

Speaker Change: No I would think about them being similar.

Unknown Executive: Now, I think about them being similar. You know, at the end of the day, as we think about this, it's just an important opportunity to continue to expand. From a capability standpoint, we've got the foundation. We did some deliberate things from just an underwriting talent experience perspective in that space. You get into lower deductible levels, and so you get into a different set of drivers of claims and claim severity that, you know, we wanted to make sure we had the right people in play.

Wesley Collin Carmichael: The.

Speaker Change: The end of the day as we think about this is just an important opportunity to continue to expand from a capability standpoint, we've got the foundation. We did do some deliberate things from a just an underwriting talent experience perspective in that space, you get into lower deductible levels and so you.

Speaker Change: Get into a different set of drivers of claims and claim severity.

Speaker Change: We wanted to make sure we have the right people in place. So this is really a build of the capability or the over really three years to four years and we're starting to see excuse me starting to see the benefits of that come in and start to be a more material piece of the overall sales story, which I would think of it as roughly 10% of the sales.

Unknown Executive: And so this has been really a build-up of the capability over really three to four years. And we're starting to see, excuse me, the benefits of that come in and start to be a more material piece of the overall sales story, which I would think of as roughly 10% of the sales for stop loss coming from that expansion. We think that will continue to build over time, but I would not think about it as something that's going to drive our margin in a material way to be anything different than what we've historically experienced.

Speaker Change: Our first stop loss coming from our expansion, we think that will continue to build over time, but I would not think about it.

Speaker Change: It's something that's going to drive our agenda in a material way it could be anything different than what we've historically experienced.

Speaker Change: Great. Thanks, and then on investment management, I think you pointed last quarter to the $10 billion pipeline I think you highlighted that that kind of remains in place.

Wesley Collin Carmichael: And then on investment management, I think you pointed to the $10 billion pipeline last quarter. I think you highlighted that that kind of remains in place. And I heard your comments, Matt, but I'm just thinking about it. If FedCuts do move out to 2025, do you think that funding and some of that pipeline kind of move towards the back half of 2024 or even later? Just curious about your perspective there.

Speaker Change: Heard your comments, Matt, but im just thinking about if the fed cuts do move out to 2025 do you think the funding and some of that pipeline kind of moves towards the back half of 'twenty four or even later just curious to your perspective there.

Speaker Change: Yes, Thanks Wes.

Unknown Executive: Yeah, thanks, Wes. On the institutional side, we're seeing more of a build. The relative stability or the lowering of volatility is the important thing. And if the Fed's staying still for an extended period, while it may disappoint the market over a short-term horizon, that stability builds confidence and movement within the institutional asset base. We've already seen that on the retail base, both domestically and internationally, and we've seen that on the insurance side. The insurance side, which is a preeminent business of ours, really paused through last year.

Speaker Change: On the institutional side again, we're seeing more of a build the relative stability or the lowering of volatility is the important thing and then the fed staying still for an extended period.

Speaker Change: May disappoint the market over a over a short term horizon that stability build confidence and movement within the institutional asset base, we've already seen that on the retail base, both domestically and internationally and we've seen that on the insurance side. The assurance side, which is the preeminent business of ours really pass through last year that created a headwind.

Unknown Executive: That created a headwind, and it has accelerated this year, and we're seeing that expand into the pension space, where there are a lot of industry articles around increased allocations to fixed income. We are seeing client engagement increase there. Again, we've got strong products and strong performance. That's really the next inflection point for us to see in our business. And again, the second-quarter outlook for that is strong. But again, as we step back, it's really the breadth of products and distribution channels that are all starting to improve. As we look to the second half, it's hard to know.

Speaker Change: Has accelerated this year and we're seeing that expand into the pension space, where there's a lot of industry articles around increased allocations to fixed income.

Speaker Change: Seeing client engagement increase there again, we've got strong products with strong performance. That's really the next inflection point for us to see in our business and again, the second quarter outlook for that is strong but again.

Speaker Change: As we step back it's really the breadth of products and distribution channels Theyre all starting to improve as we look to the second half hard to know from them from a forecast there's an election. The fed has activity to undertake we have announcements today.

Unknown Executive: From a forecast, there's an election, the Fed has activity to undertake, we have announcements today. But just, I would really highlight the point, stability at a high level of rates is not harmful to client activity. It's volatility, and that's declining.

Speaker Change: But just I would.

Speaker Change: What I'd really highlight the point stability at a high level of rates is not harmful to client activity its volatility and thats been declining.

Speaker Change: Our next question is from Tom Gallagher with Evercore ISI. Please proceed.

Thomas George Gallagher: Our next question is from Tom Gallagher with Evercore ISI. Please proceed.

Thomas George Gallagher: Good morning first question just to follow up on medical stop loss Rob the.

Thomas George Gallagher: Morning. First question just to follow up on medical stop loss. Rob, what did you do with pricing in that business? For this past year's renewal, you know, heading into 24, did you get a rate? over and above what you normally get? Or was it just in line?

Thomas George Gallagher: What did you do with pricing in that business for this past year renewal heading into 'twenty. Four did you did you get rate.

Thomas George Gallagher: Over and above what you normally get or was it just in line and what are your plans I assume we're entering into getting close to where you're thinking about pricing and renewal season for this year.

Unknown Executive: And what are your plans? I assume we're entering into getting close to where you're thinking about pricing and renewal season for this year. Just given your current experience, would you expect to push through more rates than usual?

Thomas George Gallagher: Just given your current experience would you expect to push through more rate than usual.

Thomas George Gallagher: Yeah.

Unknown Executive: Yeah, so the more than usual is the key part of that question. Look, where I think we have completed the renewal cycle.

Thomas George Gallagher: Yes, so the more than usual so the key part of that question look we're I think as we completed the renewal cycle. It was very much in line with the target we set just to bring clarity to that piece of it and the other thing I'd add is also our retention was was in line with expectations.

Unknown Executive: It was very much in line with the target we set just to bring clarity to that piece of it. And the other thing I'd add is that our retention was also in line with expectations. And just in a normal year, that's losing, you know, 20% of the book roughly. That's sort of the right benchmark.

Thomas George Gallagher: In a normal year.

Thomas George Gallagher: Losing 20% of the book roughly.

Thomas George Gallagher: That's sort of the right benchmark.

Unknown Executive: You know, you vacillate a little bit around it. But so there's always tension in the renewal process, as you would expect. So I would say those two factors played in and played out relatively close to what we would expect them to. Now, as we think about the future, I will tell you, every year, I think about getting more rate. It's a business with an inflationary trend perspective in it. The risk that we take is to leverage inflationary trends. So you should think about it even being higher than some sort of traditional medical trend.

Thomas George Gallagher: Vacillate, a little bit around it but so there is always tension to the renewal process. Since you would expect so I would say those two factors played in and played out relatively close to what we would've expected now as we think about the future I will tell you every year I'm thinking about getting more rate, it's a business with inflationary trend.

Thomas George Gallagher: <unk> perspective in it the risk that we take is leverage trend. So you should think about it even being higher than sort of traditional medical trend and so that's always the element that we bring into it and southern I have alluded to from a process standpoint will go through the same rigor that we go through every year, when we sort of quarter turn.

Unknown Executive: And so that's always the element that we bring into it, as Heather and I have alluded to, from a process standpoint. We'll go through the same rigor that we go through every year. Will we sort of quarter turn, half turn the screw on the discipline, the alignment with the team, and making sure there's clarity on execution? For sure. You can expect that, but I wouldn't also think about it as dramatic shifts. This is a market that continues to grow. We've done it over a long period of time. And I have a lot of confidence in the team in the process. Yeah, maybe it's time to

Thomas George Gallagher: Half turn the screw on.

Thomas George Gallagher: The discipline the alignment with the team and making sure there is clarity on execution for sure.

Thomas George Gallagher: You can expect that but I wouldnt also think about it as dramatic shifts. This is a market that continues to grow we've done it over a long period of time and have a lot of confidence in the team and the process and maybe Tom just one clarification.

Unknown Executive: Yeah, maybe, Tom, just one clarification, one build for me on Rob's comment is first, when we're setting the prices, we look back over a three-year period. We're not just looking at the prior year's claims experience, which we know can be a little bit volatile. But to go back, and I know, Tom, you know this, why we like this product so much is that there's built-in protection in this product. The fact that we have the ability to annually reprice it, the fact that we use reinsurance to protect against large claims, stop-loss creates really nice growth opportunities and diversification, and I think, over the long term, it has demonstrated really strong contribution to shareholder value, and we expect that to continue going forward.

Speaker Change: Clarification, one builds for me on Rob's comment is first when were setting the pricing we look back over a three year period, we're not just looking at the prior year claims experience, which we know can be a little bit volatile, but to go back and anytime you note that says why do we like this product so much.

Speaker Change: Is that there is built in protections in this product. We the fact that we have the ability to annually we price. It. The fact that we use reinsurance to protect against large claims stop loss creates really nice growth opportunities and diversification I think over the long term has has demonstrated really strong contribution to shareholder value and we.

Speaker Change: Expect that to continue going forward.

Thomas George Gallagher: I appreciate the caller Heather and Rob on that. My follow up is just on the pipeline for wealth and how we should think about that translating into your flow guidance. I think the $15 billion is the number you've used. I don't know if you've split that out between record keeping and full service of the $15 billion pipeline. But how can you help us sort of map the 15 billion into the 1 billion for full service and 3 billion for record keeping and how that sort of how we should think about the, I guess, overall deposits and then the persistency and how that all nets out? Thanks.

Speaker Change: Appreciate the color Rob on that Mike.

Speaker Change: My follow up is just on the pipeline in wealth and how we should think about that translating into your flow guidance I think the $15 billion.

Speaker Change: Is the number you've used I don't know if you've split that out between recordkeeping and full service of the $15 billion pipeline.

Speaker Change: But how do you can you help us sort of map the $15 billion.

Speaker Change: The 1 billion for full service and $3 billion into record keeping and how that sort of.

Speaker Change: How we should think about.

Speaker Change: The I guess overall deposits and then the persistency and how that all nets out. Thanks.

Unknown Executive: Yeah, no, great question, Tom. I'll try to maybe just reiterate some things, but also, hopefully, make sure it's crystal clear. From a flow perspective, we've, again, talked about the $1 billion for full service, $3 billion for record keeping. We implemented, obviously, part of that $15 million in the first quarter, so you sort of see the net result and impact of that just in the ending point for the quarter. As we think about activity moving forward, we've tried to provide guidance around general account, which is obviously a piece of the full service story in particular.

Speaker Change: Yes, no great question, Tom I'll try to maybe just reiterate some things, but also hopefully make sure it's crystal clear.

Speaker Change: A flow perspective.

Speaker Change: Again, <unk> talked about the 1 billion for full service $3 billion for record keeping.

Speaker Change: Implemented obviously part of that $15 million in the first quarter. You. So you sort of see the net result, and the impact of that just in the <unk>.

Speaker Change: Lean point for the quarter, because we think about activity moving forward. We've tried to provide the guidance around general account, which is obviously.

Speaker Change: Piece of the full service story more in particular.

Unknown Executive: And so I feel like we've given you the pieces and parts. You've also got the spread guide on what we think next quarter will look like. So I think we've tried to make as much visible as we possibly can, but the high-level fundamentals on new business activity feel good about that. As we foreshadowed in Don's comments, the second half of the year is where you'll really see the net flow emerge. And as you know, in the larger end of the market, you get things swinging from quarter to quarter a little bit, but we feel really good about that guidance for the full year.

Speaker Change: And so I feel like we've given the pieces and parts.

Speaker Change: <unk> got also the spread guide on what we think next quarter will look like.

Speaker Change: So I think we've tried to make as much visibility as we possibly can but the high level of fundamentals on new business activity feel good about that.

Speaker Change: As we foreshadowed in Dons comments, the second half of the year is where you'll really see the net flow emerge.

Speaker Change: And as you know in the larger end of the market you get things swinging from quarter to quarter, a little bit, but we feel really good about again.

Speaker Change: <unk> for the full year.

Unknown Executive: And I would keep in mind when you think about wealth, beyond the flow story is really the strong organic growth story. You saw this quarter we gave you the participant growth. So we've continued to drive participants, we've driven plan counts, we've driven asset growth. We've all done it organically.

Speaker Change: And I would keep in mind, when you think about well beyond the flow story is really the strong organic growth story you saw in this quarter. We gave you the participant growth.

Speaker Change: Continue to drive participant participants being driven plan counts, we've driven asset growth. We've all done it organically and it really also it goes back to the revenue diversification of this business, we have been able to navigate very different macro environments over a long period of time and finally is the free cash flow contribution from this business of Cigna.

Unknown Executive: And it really also goes back to the revenue diversification of this business. We've been able to navigate very different macro environments over a long period of time. And finally, the free cash flow contribution from this business is significant towards that $800 million of capital we expect to generate in the year. Our next question is from Wilma Burdis with Raymond James, please. Thank you for bringing up most of my questions today.

Speaker Change: Towards that 800 million of capital, we expect to generate in the air.

Speaker Change: Our next question is from Matt Burnell with wells.

Wilma Carter Jackson Burdis: Our next question is from Wilma Burdis with Raymond James, please. Thank you for being up. Most of my questions have been answered.

Matthew Toms: And James Please proceed.

Matthew Toms: Hey, good morning, most of my questions have been answered, but just one quick one.

Matthew Toms: Could you please discuss the upcoming $400 million debt maturity in February 2025, we understand you have $400 million of excess capital, which can help address it but.

Matthew Toms: But could you walk us how you would think about the potential financial impacts of refinancing versus paying down. Thank you.

Speaker Change: Sure well month.

Unknown Executive: As you have rightly noted, we have approximately $400 million of debt maturing in the early part of 2025. We are currently evaluating how we'll handle that maturity. But I guess I might offer up that we have considerable optionality and flexibility to manage that situation. Our balance sheet is well positioned. Our leverage ratio is 28%, and as you know, our target is 25 to 30. So we're comfortably in that range. And as you also noted, we are consistently generating capital and have $400 million of excess capital.

Speaker Change: You have rightly noted we have 400 million approximately $400 million of debt maturing in the early part of 2025.

Speaker Change: We are currently evaluating how we'll handle that maturity, but I guess I might offer up we have considerable optionality and flexibility to manage that situation.

Matthew Toms: Our balance sheet is well positioned our leverage ratio was 48% and as you know our target is 25% to 30. So we're comfortably in that in that range and as you. Also noted we are generating consistently generating capital and have $400 million of excess capital. So we have not.

Matthew Toms: Yet made a decision on how we're going to move forward, but I think we have a lot of good flexibility there.

Matthew Toms: We expect to have more certainty around that plan.

Matthew Toms: In the next coming quarters, and we've communicated to you at that time, but but I think that we.

Matthew Toms: We sit from a position as we sit from a position of strength right now and feel good that we will be able to make a decision around that debt that is enforced on us, but we get to choose the pathway.

Unknown Executive: But that we get to choose the pathway. Just a quick follow-up question, if I can, is would pausing Sherry purchases be on the table or not? We've committed this year to returning $800 million of capital to shareholders. And so that commitment, in my view, is steadfast.

Speaker Change: Just a quick follow up if I can is is when pausing share repurchases be on the table or earn out.

Speaker Change: We've committed we've committed this year to returning $800 billion of capital to shareholders and so that can move that in my view is steadfast.

Speaker Change: Our next question is from Sydney Kamath with Jefferies. Please proceed.

Suneet Laxman L. Kamath: Our next question is from Suneet Kamath with Jeffries. Please proceed.

Suneet Laxman L. Kamath: Thanks. Good morning. I think on the fourth quarter call, you talked about some additional expenses in wealth solutions, and it looked like the expense discipline this quarter kind of was pretty visible. So were you able to make those investments and just offset them with cost savings elsewhere, or are those investments sort of still in front of us?

Suneet Laxman L. Kamath: Thanks, Good morning, I think on the fourth quarter call you had talked about some additional expenses in wealth solutions and it looked like the expense discipline this quarter kind of.

Suneet Laxman L. Kamath: It was pretty visible so were you able to make those investments and just offset it with cost savings elsewhere or are those investments still in front of us.

Speaker Change: Yes. Thanks for the question Heather I'll take that so there are a couple of things as you know we've got a long track record of being disciplined about about expenses and we meaning we took meaningful expense actions in the quarter across our businesses, while still being able to invest in the business and the way that I would think about those is.

Heather Hamilton Lavallee: Yes, Suneet, thanks for the question. Heather, I'll take that.

Heather Hamilton Lavallee: So, you know, a couple of things. As you know, we've got a long track record of being disciplined about expenses, and we took meaningful expense actions in the quarter across our businesses while still being able to invest in the business. The way that I would think about those things is that Rob was able to do some things in terms of combining the teams across workplaces, and that is allowing us to achieve some expense savings. We continue to take advantage of Voya India more broadly across our businesses, which is quite meaningful.

Suneet Laxman L. Kamath: Rob was able to do some things in terms of combining the teams across workplace that is allowing us to achieve some expenses on the continued to take advantage of India and more broadly across our businesses, which is which is quite meaningful.

Suneet Laxman L. Kamath: I'll now turn it to Dan to add some additional color on the expenses.

Dan: This is something that is a strong muscle for us and something we're going to continue to lean into from time to time.

Heather Hamilton Lavallee: Yes, as Heather mentioned, this is a strong muscle for us. We did lean in in 2024. And, you know, I would say that we have a track record of taking significant expenses out of the business, but that doesn't keep us from continuously trying to reduce expenses and be very thoughtful and disciplined around that. I would put the expense reductions in a few categories, maybe. One is to optimize our operating model.

Dan: As mentioned this is a strong muscle for us we did lean in in 2024.

Dan: I would say that the.

Dan: We have a track record of taking significant expenses out of the business. So you know, but that doesn't keep us from continuing we continuously trying to.

Dan: Reduce expenses and be very thoughtful and disciplined around that I would put sort of the expense reductions in a few categories. Maybe one is operate optimizing our operating model. So.

Heather Hamilton Lavallee: We think it's appropriate for us to look at our operating model. We have had some significant divestitures over the last several years. And so we are very focused on making sure that the back office and the systems that we have in place to support the new business as it's been repositioned are appropriate. The second area where we've been very focused is around driving expense synergies. So we obviously had the Allianz GI transaction and the benefit-focused transaction, and both the teams in IM and in health are driving real, meaningful reductions in expenses there.

Dan: We think it's appropriate.

Dan: For us to look at our operating model, we have had some significant divestitures over the last several years and so we are very focused on making sure that the back office and the systems that we have in place to support the new business as it has been repositioned as appropriate.

Dan: Second area, where we've been very focused is around driving expense synergies. So we obviously had.

Dan: Ali on the Gi transaction and the benefit focus transaction and both the teams and I am at and health are driving real meaningful reductions in expenses there we're leveraging.

Heather Hamilton Lavallee: We're leveraging actions that we've taken in the past to drive incremental value. So Heather mentioned India, Voya India. We took full ownership of that, and we're seeing the real benefits of that. And then, maybe I'd mentioned that we have ongoing optimization of our real estate footprint, and that's also been benefiting us and been reflected in the reduction in expenses.

Dan: Actions that we've taken in the past to drive incremental value. So Heather mentioned, India, India. We took full ownership of that and we're seeing the real benefits of that and then finally, maybe I'd mentioned that were ongoing we have ongoing optimization of our real estate footprint and that's also been benefiting us and then reflected in the.

Dan: <unk> expenses and <unk> suggest to close the question and I didn't answer upfront is we did make the appropriate investments as expected.

Heather Hamilton Lavallee: And Suneet, just to close the question I didn't answer up front, we did make the appropriate investments as expected.

Suneet Laxman L. Kamath: Got it. Okay, that's helpful. And then, on the wealth side, can you just unpack the participant withdrawals and kind of what's going on there? It seems like we've been talking about that for the past couple of quarters. Are these folks that are at retirement age that just kept the money in the 401k plan previously and now are moving it elsewhere?

Speaker Change: Got it Okay. That's helpful. And then I guess on the wealth side can you just unpack the participant withdrawals and kind of what's going on there. It seems like we've been talking about that for the past couple of quarters are these folks that are at retirement age that just kept the money in the 401K plan previously and now we're moving it elsewhere.

Speaker Change: If we get some color on that and then is there any meaningful difference in terms of these participant withdrawal trends between the.

Speaker Change: 401, K business as well as the tax exempt business.

Speaker Change: Yes, so yes, we've been talking about it for a number of quarters now.

Unknown Executive: Yes, Suneet. So, yes, we've been talking about it for a number of quarters now. We will probably continue that as we've guided to on expectation that the full year would play out in a consistent manner to the first quarter. So, you know, you take a step back, and obviously, we've been peeling apart as best we can, and we can do it well. What is going on?

Dan: We'll probably continue that as we have guided to an expectation that the full year would play out in a consistent manner to first quarter.

Dan: So you do the step back and obviously, we've been peeling apart because best we can and we can do it well what is going on what is the situation for these individuals as you think about different age cohorts you would think about.

Unknown Executive: What is the situation for these individuals? You think about different age cohorts. You think about, you know, are they separated from service? They've left money behind, and are there things going on that are driving activity?

Dan: Separated from service they've lost money behind and are there things going on that are driving activity.

Dan: Look the main thing that we've talked about historically is also I still think true as you look across the industry is talking about getting flows obviously annuity providers and the influence of advisors.

Dan: Have on those decisions.

Dan: Apparent.

Unknown Executive: And, you know, look, the main thing that we've talked about historically is also, I still think true, is you look across the industry and who's talking about getting flows, obviously, annuity providers, and the influence that advisors have on those decisions is just apparent. That's a piece of the story, is that, you know, people have fixed rate options that they didn't used to have outside of insurance products and just banking products. I think there's an element of there being some pent-up demand, and as you get older, obviously, you think a little bit more conservatively about where you want your money and how you want to allocate it.

Dan: That's a piece of the story is it.

Dan: People have fixed rate options that they didn't used to have outside of insurance product and just banking products. I think there is an element of there was some pent up demand and as you get older. Obviously, you think a little bit more conservatively about where you want your money on how you want to allocate it.

Unknown Executive: But the thing, and Heather and I alluded to this already, is that this is an area where we think there's opportunity for us to continue to lean in on advice and education to support those decisions better around the retail story. But, you know, we're going to continue to evolve the product set, the solutions we have, and the capabilities that we want to own and control versus how we continue to partner and work with not only plan sponsors, but also our As you can imagine, it's a complex decision point, and there are a lot of players involved that we think we can continue to work better with.

Dan: The thing and Heather and I alluded to this already I think this is an area, where we think theres opportunity for us to continue to lean in on advice and education to support those decisions better around the retail story.

Dan: But we're going to continue to evolve the product set the solutions, we have and the capabilities that we want to own and control versus how we continue to partner and work with not only planned sponsors, but also our distribution partners.

Dan: As you can imagine Thats a complex decision point and there is a lot of players involved that we think we can continue to work better with.

Unknown Executive: And I would just point out within the quarter, just a reminder that when we see higher equity markets, you tend to see elevated participants' contributions just because their account values have grown and the recurring deposits that come in, just the ongoing contributions just can't necessarily offset that. So there certainly was some impact of that in the first quarter on participants' contributions.

Dan: And I would just point to within the quarter. Just a reminder, that when we see higher equity markets you tend to see elevated participants surrenders just because their account values have grown and the recurring deposits that come in to see ongoing contributions just can't necessarily offset that so there certainly was some impact of that in the first quarter on just kind of surrenders.

Dan: Our next question is from Nick <unk> with Wells Fargo. Please proceed.

Unknown Executive: Our next question is from Nick Anito with Wells Fargo. Please proceed.

Nick: Hey, Thanks, good morning on for a lease.

Nick Anito: Hey, thanks. Good morning on behalf of Elyse.

Nick: Most of our questions are answered, but just had a follow up I'm going to stop loss.

Nick Anito: Most of our questions were answered, but I just had a follow-up question about the stop loss. I think you guys said that 10% of new sales are coming from kind of that lower, lower market. Is there an overall target for that going forward or as a percent of the book? Or is that just kind of dynamic?

Nick: You said that 10% of new sales are coming from kind of that lower lower market is there.

Nick: An overall target for that going forward or as a percent of the book or is that just kind of dynamic.

Unknown Executive: No, look, I would just say it's in its current state. It's a state we'll continue to think about growing and having it be a more meaningful part. But again, back to one of the earlier questions, would I then think about that bringing in business at a different margin expectation? I would not. So I think from a, as you think about modeling, it is a variable that at this stage you need to be concerned about or worried about changing the dynamic within stop loss. But you know, that's the current state.

Dan: No.

Speaker Change: We're just saying its current state.

Speaker Change: It's a state we will continue to think about growing and have it be a more meaningful part, but again back to one of the earlier questions. What I, then think about that bringing in business at a different margin expectation, but not so I think from a.

Speaker Change: You should think about modeling it is in the variable but at this stage you need to be concerned about or worried about changing that dynamic dynamic within stop loss.

Speaker Change: But that's current state.

Speaker Change: Thanks, that's helpful and then I guess, just as a follow up.

Nick Anito: Thanks, that's helpful. And I guess just as a follow-up. On alts, is there any... Sensor expectation for 2Q? It seemed like you guys held up a little bit better than some peers this quarter.

Speaker Change: On <unk> is there any.

Speaker Change: Sensor expectation for <unk>. It seemed like you guys held up a little bit better than some peers this quarter.

Speaker Change: Yes, Nick this is Matt I'll take that close to the long term average in the first quarter. We we stated confidence in the 9% range for the year. We did provide in the materials. This quarter additional information around the makeup of our alternatives portfolio you referenced that we've held up a bit better than what is it.

Unknown Executive: Yeah, Nick, this is Matt. I'll take that.

Unknown Executive: Close to the long-term average in the first quarter, we stated confidence in the 9% range for the year. We did provide in the materials this quarter additional information around the makeup of our alternative portfolio. Your reference that we've held up a bit better than what is a – I'd say higher dispersion within the industry, which we view as correct and which we think is driven by the quality of the portfolio. You'll see it in the materials, the heavy skew towards private equity.

Speaker Change: Sure.

Speaker Change: Say higher dispersion within the industry, we view is correct.

Speaker Change: We think driven by the quality of the portfolio.

Speaker Change: See the materials that the heavy skew towards.

Speaker Change: Private equity.

Unknown Executive: And within that, while diverse, a reasonably low number on commercial real estate at 3% of that's all spoken. We think that's different than our peers. It's provided returns above that 9% number historically, and it was close to that in Q1, and the forward look is encouraging to us. It's always hard to know exactly where valuations will come in, but as we look into the second quarter, we think there's a bit of a tailwind, but we're comfortable with 9% for the entire year.

Speaker Change: And within that while diverse a reasonably low low number on commercial real estate at 3% and Thats all stuff, we think thats different than our peers its provided.

Speaker Change: Returns above that 9% number historically close to that in Q1 and the forward look is encouraging to us always hard to know exactly where valuations will come in but as we look into the second quarter. We think there is a bit of a tailwind, but we're comfortable 9% for the for the entire year.

Speaker Change: As a reminder, it is star one on your telephone keypad, if he would like to ask a question. Our next question is from Kenneth Lee with RBC capital markets. Please proceed.

Kenneth S. Lee: As a reminder, it is star one on your telephone keypad if you would like to ask a question. Our next question is from Kenneth Lee with RBC Capital Markets. Please proceed.

Kenneth S. Lee: Hey, good morning. Thanks for taking my question. Just one on investment management, revenue yields. They were picking up pretty nicely the last couple of quarters last year, slight decline this quarter. Wondering whether there was anything to call out in particular or whether it was just due to makeshift. Thanks.

Kenneth S. Lee: Hey, good morning, Thanks for taking my question just one on investment management.

Kenneth S. Lee: Revenue yields they were picking up pretty nicely last couple of quarters last year slight decline. This quarter wondering whether there was anything to call out in particular or whether it was just due to mix shift. Thanks.

Speaker Change: Yes, thanks, Thanks, Ken let.

Unknown Executive: Yeah, thanks. Thanks, Ken.

Speaker Change: Let me, let me provide some detail on that it is really as you pointed out a mixed shift.

Speaker Change: We've seen our revenue yield as a counter industry trend thats been increasing as you referred to over recent quarters.

Speaker Change: We're projecting more stability as we look in the year forward, there's always different flows of different time, and if we think about.

Unknown Executive: Let me provide some detail on that. It is really, as you point out, a mixed shift. We've seen our revenue yield as a counter industry trend. It's been increasing, as you refer to in recent quarters. We're projecting more stability as we look in the year forward. There are always different flows at different times.

Speaker Change: Retail has helped us support that over the last number of quarters, we think about the institutional and insurance channels growing you can have some influence that will that will move that around we do not view this as an inflection point or a change in the moving forward.

Speaker Change: And ultimately that revenue yield is driving the margin improvement as we mentioned so both on the on the top line and on the expense base is happy how that's playing through to the overall business.

Unknown Executive: And if we think about retail has helped support that over the last number of quarters, and we think about the institutional and insurance channels growing, You can have some influence that'll move that around. We do not view this as an inflection point or a change in the direction of moving forward. And ultimately, that revenue yield is driving the margin improvement, as we mentioned. So both on the top line and on the expense basis, I'm happy with how that's playing through to the overall business.

Speaker Change: Great very helpful and just one more if I may in terms of the retail net inflows in the quarter within investment management.

Kenneth S. Lee: Great, very helpful there. And just one more, if I may, in terms of the retail net inflows in the quarter within investment management. Any way that you could help us size out the contribution from AGI International Distribution and perhaps how we should think about any kind of forward trajectory in terms of the contribution to net flows over the near term? Thanks.

Speaker Change: Any way that you could help us.

Kenneth S. Lee: Size out the contribution from the Agi International distribution and perhaps how we should think about the any kind of forward trajectory in terms of the contribution to net flows over the near term. Thanks.

Speaker Change: Yes, no happy to happy to provide that it's balanced across the different products the income and growth in the agi component is a.

Unknown Executive: Yeah, no; happy to provide that. It's balanced across the different products. The income and growth and the AGI component is a strong contributor to that. I think the small majority of that, but really, the story there is the breadth and what we've seen engagement and client activity more broadly. So we're still happy with the income and growth component, particularly in the Asian market. In the domestic market, we're seeing better engagement across fixed income, and core fixed that Don mentioned in his comments.

Speaker Change: As a strong contributor to that I think the small majority of that but.

Speaker Change: The story there is the breadth and what we've seen engagement and client activity more broadly. So we're still happy with the incoming growth component, particularly in the Asian market in the domestic market were seeing better engagement across fixed income core fixed income that Don mentioned in his comments I'm also in the multi asset in the model business we're seeing.

Unknown Executive: Also, in the multi-asset and the model business, we're seeing better uptake. And in our equity strategies, performance really hasn't improved there in terms of demand on the small cap side. So we're seeing that breadth improve, but again, balance is more international than it was historically, the more domestic and international pairing together right now.

Kenneth S. Lee: Seeing better uptake and in our equity strategies performance really haven't improved there and demand in the small cap side. So we're seeing that breath improve but again balanced more than historically was more international the more of the domestic and international pairing together right now.

Kenneth S. Lee: This concludes our question and answer session I would now like to turn the conference call back over to Heather in the valley for any closing remarks.

Operator: This concludes our question and answer session. I would now like to turn the conference call back over to Heather Lavallee for any closing remarks.

Heather: Thank you.

Heather Hamilton Lavallee: To summarize a few key messages, we delivered on our financial targets in the first quarter and remain on track to achieve our targeted full-year results for 2024. Our commercial strengths remain strong with robust pipelines across workplace solutions and investment management. We remain focused on strategic execution, expense discipline, and prudent capital management while continuing to invest in growth.

Heather: Summarize a few key messages, we delivered on our financial targets in the first quarter and remain on track to achieve our targeted full year results for 2024.

Heather: Our commercial strength remains strong with robust pipelines across workplace solutions and investment management.

Kenneth S. Lee: Remain focused on strategic execution.

Speaker Change: <unk> discipline and prudent capital management, while continuing to invest in growth. Thank you and we look forward to updating you on our progress.

Operator: Thank you, and we look forward to updating you on our progress. Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Operator: Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Speaker Change: Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

Speaker Change: Yeah.

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unknown: Copyright 2020 Mooji Media Ltd. All Rights Reserved. No part of this recording may be reproduced without Mooji Media Ltd.'s express consent. Thanks for watching!

Speaker Change: Okay.

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