Q1 2025 Voya Financial Inc Earnings Call
Speaker Change: Good morning. Welcome to Voya Financial's first quarter, 2025 Earnings Conference call. All participants will be in a listen only mode. Should you need assistance? Please signal a conference specialist by pressing this dark 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 touch tone phone. To withdraw your question, please press star two. Participants are limited to one question and one follow-up.
Speaker Change: Please note this event is being reported. I would now like to turn the call over to Mei Chu. Head of investor relations, please go ahead.
Speaker Change: Good morning, and thank you for joining us to Voya Financial's first quarter, 2025 Earnings Conference Call. As a reminder, materials for today's call are available on our website at investors.boya.com
Speaker Change: We will begin with Prepare Marked by Heather Lavallee, our Chief Executive Officer, and Mike Katz, our Chief Financial Officer. Following the prepared task, we would take your questions.
Speaker Change: I'm also joined on this call by the heads of our businesses, specifically J. Cadison, CEO of Play Solutions, and that's Tom, CEO of Investment Management.
Speaker Change: Turning to our earnings presentation materials that are available on our website.
Speaker Change: On slide two, some of the comments made during today's discussion may contain forward-looking statements and refer to certain non-GAAP financial measures within the meaning of federal security's law.
Speaker Change: That reconciliations are available in our press release on Financial Supplement down-to-down Buster Relations website. And now I will turn the call over to Heather.
Heather Lavallee: Thank you, Manny. Good morning and thank you for joining us today. Let's turn to slide four.
Heather Lavallee: Let me start with what continues to differentiate Voya, especially in today's environment.
Heather Lavallee: Our Capitalite businesses generate diverse revenue streams and have allowed us to consistently generate free cash flow across all market cycles.
Heather Lavallee: Our strong capital and liquidity positions support our healthy balance sheet, giving us confidence even in adverse markets.
Heather Lavallee: and the need for innovative, value-edged workplace solutions, supported by top notch asset management, continues to grow.
Heather Lavallee: For these reasons, Voya offers a resilient and relevant business model with a clear commitment to creating long-term value for our stakeholders, making us a compelling investment opportunity.
Turning to highlights from the quarter on page 5. [inaudible]
Heather Lavallee: I'm encouraged by the results we delivered across our businesses, which were driven by continued execution against strategic priorities.
Heather Lavallee: and Wealth Solutions and Investment Management. We delivered strong commercial results, highlighting continued momentum into 2025.
Heather Lavallee: In wealth solutions, we achieved defined contributions organic net flows of approximately $30 billion.
Heather Lavallee: Additionally, we added $60 billion in assets from the One America Acquisition, which closed in January . Together, these results are a clear indicator of our focus execution and competitive differentiation.
Heather Lavallee: Momentum is strong in 2025, with a 70% increase in full service known sales in the first quarter, as compared to the prior year.
Heather Lavallee: We also have robust commitments in the large and mega space set to fund in 25 and 26, particularly in large corporate and tax exempt markets.
Heather Lavallee: Additionally, our investment platforms, including fixed income, private assets, and multi-asset, can you demonstrate strength?
Heather Lavallee: Our pipeline remains strong and diverse, supporting our objectives of achieving our long-term organic growth target of over 2%.
We improve margins and health solutions in the first quarter.
Heather Lavallee: Our goal is to stabilize or stop loss experience, and while early, we are off to a good start.
Heather Lavallee: Economic signals have been mixed, and market volatility has remained elevated, which leads us to proceed with caution
Heather Lavallee: This is a more complex environment than we've seen in some time and we remain mindful of this backdrop.
Heather Lavallee: But our results this quarter underscore the strength of our business model and our ability to focus on the levers that matter most [inaudible]
Heather Lavallee: Commercial momentum, cast generation, and maintaining a healthy balance sheet. Finally, I want to recognize our team in a dynamic environment, their focus and execution continue to make a real difference.
Mike Katz: With that, Michael now provide more details on our performance and results, Mike.
Mike Katz: Thank you, Heather. Let's turn to our financial results on slide 7.
Mike Katz: We reported $2 of adjusted operating earnings per share in the first quarter, a 13% increase over the prior year.
Mike Katz: Results reflect the progress we are making on our near-term priorities [inaudible]
This includes favorable performance in health solutions.
Mike Katz: earnings contributions from one America and strong commercial momentum across both well solutions and investment management.
Mike Katz: While setting this, alternative income was 15 cents below our long-term expectations .
at an annualized return of approximately 5%
Mike Katz: We expect second quarter alternative returns to be below long-term expectations due to the
Mike Katz: We generated approximately 200 million of cash in the quarter above our 90% target.
Mike Katz: Gapmet Income was below cash generation due to non-cash items emerging in the quarter. With that, let me turn to our segment results.
Touring the wealth solutions on Slide 8
Mike Katz: We generated 207 million of adjusted operating earnings in the quarter [inaudible]
Mike Katz: Our results reflect higher fee-based revenues as we continue to organically grow both participant and AUM balances.
Mike Katz: We added over 60 billion of assets with one America and retained approximately 90% of plans consistent with our expectations.
Mike Katz: Additionally, we generated approximately 30 billion of total defined contribution net inflows in the first quarter.
Mike Katz: Full service net flows, before one America, were also positive driven by strength and emerging markets.
Mike Katz: While we are encouraged by first quarter results, equity markets will affect our second quarter AUM balances and in turn revenues.
Mike Katz: Looking forward, our relentless focus remains on driving value through our retirement solutions and the support we bring to our customers, which now exceeds 9 million participant accounts.
Turning to Investor and Management on Slide 9
Adjusted operating earnings were 41 million in the first quarter [inaudible]
Mike Katz: Higher management fees across both institutional and retail channels were all set by lower investment capital returns and increased seasonal expenses.
Mike Katz: In the quarter, we generated $7.7 billion of net inflows across a breath of clients, strategies, and channels.
Mike Katz: We generated 5.2 billion of institutional net inflows. This included the launch of a private equity fund, demand for core fixed income and private credit strategies in the insurance channel, and the launch of 3 CLOs.
Mike Katz: First quarter, retail net inflows of 2.5 billion included positive flows, both domestically and through international channels.
Mike Katz: Looking ahead, we have a competitive track record of long-term investment performance. Our focus is on ensuring we continue to deliver for a client and remain a trusted partner for their current and future business.
Turning to Health Solutions on Slide 10.
Mike Katz: Adjusted operating earnings for health solutions for 46 million in the quarter
Mike Katz: In stop loss, positive prior year reserve developments drove the favorable results, as first quarter experience supported lower expected loss ratios.
Mike Katz: The January 2024 cohort is now over 90% complete as of March 31st and will be near complete early in the third quarter
Mike Katz: Our estimated loss ratio for the January 2025 stop loss cohort is 87 percent. It is early in the development of this lock as we expect experience will be more credible in the third and fourth quarter of this year.
Mike Katz: Turning to group life, elevated claims were driven by higher claims frequency in January , which normalized in February and March.
Mike Katz: In voluntary, while claims experience was in line with expectations, we increased reserves in light of the uncertain environment and the potential impact that may have on utilization.
Mike Katz: This quarter demonstrates progress in meaningfully improving margins and health solutions.
Turning to Slide 11
Mike Katz: Our balance sheet remains strong. We ended the quarter with excess capital of approximately 150 million and a RBC ratio of 385%. As planned, we repayed approximately 400 million of debt in February , bringing our leverage ratio comfortably within our target range.
Mike Katz: Capital generated was strong in the quarter and fully funded our investment in one America. We also return capital to shareholders in the form of common stock dividends. [inaudible]
Mike Katz: In the second quarter, we expect to further strengthen our excess capital. Looking ahead, we believe companies with healthy balance sheets and high free cash flow businesses are well-positioned to navigate volatile environments and drive value for their shareholders.
Turning to Slide 12 [inaudible]
Mike Katz: We generate strong free cash flow while delivering an attractive return on equity. Our ability to generate consistent strong free cash flows is driven by how we operate our three businesses, including through challenging macro environments like today.
Mike Katz: Our diversified revenue streams, expense discipline, and healthy balance sheet gives us confidence as we continue to execute on our key priorities and deliver for our stakeholders.
I'll now turn it back to Heather [inaudible]
Heather Lavallee: Thanks, Mike. We've made progress on our key priorities in the first quarter. These results underscore not only the strength of our complementary capital-like businesses, but also the trust our clients, customers, and distribution partners continue to place in us.
Heather Lavallee: The work we do in guiding our customers through market uncertainty, highlights our purpose, and has never been more important. With that, I'll turn the call over to our operator so we can take your questions.
Speaker Change: Thank you. We will now begin the question and answer session.
Speaker Change: To ask a question, you may press star then one on your touchtone phone. If you are using a speaker phone, please pick up your handset before pressing the keys.
Speaker Change: To withdraw your question, please press star 2. As reminder, participants are limited to one question and one follow-up. One moment will we pull for questions.
Speaker Change: Hey, thanks. Good morning. My first question is on well-therning
Speaker Change: You had guided to 35 to 39% margin coming into the year you were in the upper half of that in the first quarter despite what is typically higher expenses.
Speaker Change: If the market has normal returns the rest of the year, do you think, is there anything unusual that benefit the quarter? Is this a good starting point?
Thanks, Ryan. Michael, take your question.
Mike Katz: Yeah, Ryan. So the only piece I'd really call out in the quarter
Mike Katz: was that the spread-based assets were a little higher than what we would have expected. I think it's reasonable to think that spread-based assets will continue to moderate down. However, we have seen some offsets in April just given the macro volatility where there's been more variable to fix. I think it's reasonable to think that spread-based assets were a little higher than what we would have expected.
Mike Katz: Transverse, then what we've seen in the past. If I think about wealth just more broadly on the outlook obviously when America plays a role [inaudible]
Mike Katz: Ryan, you just talked about the macro piece. We give the sensitivity so you know that'll play out as it plays out.
Mike Katz: and then there'll be some expenses andality in wealth. You can look at last year as a proxy. I wouldn't go as far as...
Mike Katz: We saw last year on the drop in expenses because we are making some targeted investments, not a dramatic amount but when you're looking at expense changes, there's a small offset from there. So that's how I would think about the second quarter. [inaudible]
Speaker Change: Ryan, I'll ask Mike to start with your question and then perhaps Jay can add a broader view of how we're looking at the voluntary business going forward.
Mike Katz: Yeah, Ryan, so you're thinking about it right with respect to just strengthening some of the reserves given the economic uncertainty that we're just surrounding all of us right now. So we did increase IBM R in the quarter for the potential higher utilization that may occur later this year. We do use IBM R as a way to try to smooth out results.
Speaker Change: As you mentioned, you know, those high forties is a way to start to think about where the utilization is like and what happened in the first quarter is very consistent with that and then we added a couple points. [inaudible]
Speaker Change: to Strength and Reserves, you'll see that reveal itself in second quarter, you'll see it reveal itself in third quarter, and then we'll update you in the fourth quarter on things how things ultimately land.
Speaker Change: and Jay, a little bit of a forward view on how we think about voluntary? Sure, right. Thanks for the question. I appreciate it. When we think about voluntary, you know, it's important to note, you know, that Voya right now is a top three leader in the voluntary and self-help marketplace.
You know, it's a marketplace that's rapidly expanding.
Speaker Change: Overall, we think about the value that we're bringing to our customers in this space. We understand the customer value journey. Right now, we're continuing to look for ways to improve the member experience.
Speaker Change: In addition to that, I call out that in 1125 open enrollment, we deployed some new guidance tools to support our customers, and this had a direct impact in driving up participation rates by 18%.
Tom Gallagher: Our next question is from Tom Gallagher with Evercore ISI. Please proceed.
Tom Gallagher: Good morning. First question is on stop loss. So I guess I just wanted to get a better handle on this 87% estimated loss for the 25 action a year. He talked a bit about how you arrive at that estimate. Are you using, are there any like leading indicators?
Tom Gallagher: of the underlying book of business you have that you're cracking, or is it more a general medical loss cost inflation estimate than informed you of that 87% number?
Tom Gallagher: Thanks, I'll ask Mike to to tee that up, but but really start I think with 24, which gives you a bit more of a walk to 25 so Mike
Mike Katz: Yeah, and Tom, thanks for the question. Heather mentioned, stop loss continues to be a very high priority for Heather, J and I. We've taken the difficult lessons that were learned in 24 and really put them into practice.
Mike Katz: Late last year as well as this year. That applies to both how we're reserving for this business but also how we're pricing it.
Mike Katz: And as Heather just mentioned, I'm just going to touch on 24 briefly and then I'll get to your question on 25. We did reduce.
Mike Katz: The expected loss ratio from 95 to 93% for that January 2024 cohort, and that's really due to the fact that we're looking to experience in the quarter that that's coming through better than what we reserve for.
Tom Gallagher: Now as it relates to that 25 business that you asked about Tom, you know, I would really think about it more around how is this performing relative to the 2024 cohort and the work that we did both on where we set rates and how we performed our risk selection. Thank you very much.
Tom Gallagher: You know as a reminder, we achieved a 21% average net effective increase for that January 2025 business. We believe that's above expected medical trend. We achieved even higher rates for under performing cases. [inaudible]
We also improved our underwriting.
Tom Gallagher: including our approach to known claims, which was a key driver of the elevated loss ratios last year. And so I would think of it more as kind of the leap off from 24, Tom, then necessarily a lot of leading indicators. But when we step back and think about this business.
Tom Gallagher: The annual Renewable Nature that allows us to take these type of decisive actions around
Speaker Change: still early in the completion of the book and so we'll continue to put these insights gained into practice and keep you and our investors fully posted on how things emerge. And if I can just emphasize three key points that Mike had on is number one 25 it is early will know more in the third and fourth quarter.
Speaker Change: Second is that our teams are maintaining the same level of focus and discipline into 25 heading into 26 that we carried into the 1-1-25 and I'll say again I'm proud of this team. This is a top priority and is a big love work for us to continue to drive past generation.
Speaker Change: That's very helpful, I appreciate it. It makes a lot of sense, building off at 24 and then...
Speaker Change: You believe you're getting rate and excessive loss cost trend? That all makes sense to me.
Speaker Change: Do you have any surveillance tracking mechanism on the underlying claims experience of the book where you've provided the stop loss so at least...
Speaker Change: If you know what I mean, like is there any visibility you even have on the underlying before they get to your attachment point or is it more you just you're informed at you know after you get to attachment. Amen.
Hello.
Speaker Change: Yeah, now let me all start with that, Tom, it's Heather. So, you know, first, as you can imagine, Mike and I continue to stay very close to this.
Speaker Change: with the team as is Jay. So a couple things that I would say is we continue to look at seeing very very early how our claims coming in for 25. We do get what's called a 50% notice report. So we are getting reports when claims.
Speaker Change: are approaching 50% of the deductible. So there is some early view. We also have some ability to look at first-dollar trend through our benefit focus business where in that business we get a view of just seeing how first-dollar trend is coming in and may not necessarily be on the same clients we have stop loss, but it does give us some early view. And I think the final thing I would mention is we are certainly continuing to stay close to our advisors.
Speaker Change: to see how our trends emerging in the broader health sector, just again given some of the uncertainty that we've seen over the years, so we're going to continue to be very close to this.
Joel Hurwitz: Our next question is from Joel Hurwitz with Dallian Partners, please proceed.
Joel Hurwitz: Is this more just you reaching scale and more difficult comparisons? Or is there something else driving that the lower top line coming out of 1-1-25?
Speaker Change: Heather, let me start on that is really in 24, we had some very large wins in voluntary that didn't repeat coming into the 25 season but let me turn it to Jay to just give you a view of what you're seeing in the market.
Jay Caterson: Yeah, that's right. That's a good question. Thanks, Joel. Listen, the voluntary business right now, our pipeline is exactly where we want it at this point in the year. There were some lower jumbo cases, you know, that came in in Q1 versus St. Perry last year.
Jay Caterson: But in terms of the activity and the pipeline and the persistency of the book, we like with the businesses so I I think commercial momentum is strong and you know again these large jumbo cases are lumpy and as they come through we'll take advantage of them with with appropriate pricing but but we like with the businesses right now. .
Speaker Change: Got it. And then just shifting gears. In the past, you've talked about building out retail walled capabilities. Can you just provide an update on the plans there to try to capture that opportunity? And then should we be thinking about some sort of investments impacting expenses in walled over the rest of 25 and maybe into 26?
Speaker Change: Yeah, I'm going to start on that because there's something that I've talked about on prior calls is we said that we're making very modest investments in building out retail wealth management capabilities that are already baked into the expense forecast for the wealth business.
Speaker Change: Specifically what I've talked about is that we are hiring additional field and phone based advisors and today we have
Speaker Change: over 420 advisors that are dedicated to our tax exempt business, you know, very very strong foundation.
Speaker Change: We're also making modest investments within our technology capabilities to support our advisors.
Jay Caterson: So we think that's important and I'm going to turn it over to Jay but this is one of the reasons I hired Jay is he's got a real extensive background in retail management and we see this as an important capability in the coming months and years. [inaudible]
Speaker Change: to be able to support our clients and really expand our broader wealth capability that Jay.
Speaker Change: We've got a great opportunity to provide holistic advice at the workplace which is exactly what we want.
Speaker Change: We like where we're at, we like some of the tools that we've been bringing to the team into the marketplace.
Speaker Change: and we see this as a tremendous opportunity to kind of capture what is...
Unknown Executive, Michael Katz, Donald Templin
Speaker Change: to recruit some top talent in the marketplace and so the team we have heading into the second quarter is a really strong one that's got a lot of experience so overall really excited about the business and like we're at. . .
Speaker Change: Our next question is from Elyse Greenspan with Wells Fargo, please proceed.
Speaker Change: Hi, thanks, good morning. Last quarter, you guys were talking about 750 million, I think, a free cash flow for the year and using that 90% conversion and obviously there's some investments that you're in leave management, I know Mike.
Speaker Change: You said that translated into a round, slightly less than $8 per share of earnings this year. Does anything change, you know, relative to that figure with the Q, the Q1 results, I would assume there's
Speaker Change: Yeah, hi, Elyse. So yeah, we did share some implicit guidance based on normal markets last quarter.
Speaker Change: Well, we're not sharing guidance. You can use that as a place to start with your outlook
Speaker Change: You just talked about some of the things that we need to think about. You need to think about macro sensitivities is really the biggest piece and make sure that you're adjusting for that particularly on the wealth and investment management business.
There's a relates to health. [inaudible]
Speaker Change: We did release reserves in the quarter that certainly will help the calendar year. As you look forward, I would think about the stop loss business really being 87% of the premium that we're receiving each quarter as kind of a base case.
Speaker Change: For Group Life, we talked about in the prepared remarks that was elevated in January . It's normalized in February , March, and it has in April . So I would think of that getting back to the normal range in the second quarter. And then voluntary, we talked about with some of Ryan's questions. Thank you very much.
Speaker Change: with Health. You can look at last year's a good proxy for how much we expect that to drop in the second quarter. And then for I am, we should actually expect a little more seasonality. We had elevated seasonality this quarter, first quarter, given some of the performance that we had in the fourth quarter and the compensation related to that. [inaudible]
Speaker Change: And then maybe the last piece I'd call out is just the commercial momentum in the quarter. We had approximately $30 billion of flows in retirement. We had $7.7 billion of positive flows and investment management, so that'll certainly help the calendar year results.
Speaker Change: Thanks. And then, you know, my follow-up, I guess I want to go back to stop loss and, you know, just-
Speaker Change: You know, if you could just provide a little bit of color and I guess what changed in the quarter that really drove you guys taking down that loss ratio right considering it was you know revised up you know throughout last year and then my second I guess part of that question is just with the expectations still be where you see things today that you expect to get back to target margins within stop loss that's in 2026 [inaudible]
Speaker Change: Yeah, Elyse, it's just experience. We reserve for a 95% level and coming out of the quarter, the appropriate amount of reserves is a 93% level. So it's just really how the experience
Speaker Change: is emerging with respect to what we preserve for. So it's just that simple. You know, as you think about that target range, I would kind of bifurcated into two elements. First, like, what are we pricing for? What are we going to do now?
Speaker Change: And then second, you know, when do we expect a report? Are earnings at a loss ratio consistently in that range?
Speaker Change: on the former. I mean, that's how we're pricing today, you know, that's what we, that's what we did going into January 2025 business. That's what we're doing throughout the year. But we continue to expect a two step process here as Heather mentioned earlier that 25 business, you know, we'll know a lot more about it at the end of this year. So that'll give us a sense of how things are going to ultimately end up. And so I would continue to think two step process, but we continue to have our hand on the wheel fully with respect to what we're pricing. Thank you.
Heather Lavallee: And I would just reiterate, Elyse, what we shared with Tom is, again, still, it's early on stop loss, we're going to know more going into the third and fourth quarter. You know, this is our best thinking right now on loss ratio, and stay tuned, we'll continue to update general results.
Wes Carmichael: Our next question is from West Carmichael with Autonomous Research. Please proceed.
Wes Carmichael: Hey, good morning. A couple questions on wealth. On one America that closed with the 60 billion of assets, but I just wanted to ask on the mix because I think when you'd previously talked about it, there were maybe more assets coming into full service, but it appears maybe some of that shifted toward record keeping. If I'm not mistaken, so just curious if that changed relative to your expectation.
Speaker Change: Yeah, it's really just how the reporting is coming in, West in the, during the TSA period. So no real change to how we look at this like from an earnings revenue perspective on that full service record keeping splits. It's just it's just the way it's coming over to us. We expect that'll get you know adjusted as we get to the point where that's no longer a TSA and it's in its fully in our arms. [inaudible]
Speaker Change: Yeah, and the broader step back west is just on on one America, we continue to feel good about the estimates that we gave on the revenue, the earnings, the retention coming in right in line again that was based on first quarter results what we saw, but you know I love for J to make just a few comments on what he's saying because he's been out in front of one of America clients recently. Yeah, I love it.
Thanks, Heather. Rest, appreciate the question.
Speaker Change: We've got on our team right now. We see it. They're consistently talking about the value of our team and the value that they're bringing to the participants.
Speaker Change: But the positive sentiment around the broad set of capabilities that Voya is able to bring to them.
Speaker Change: They came out loud and clear. It was a really good mix of existing Voya.
Speaker Change: clients as well as new clients that we've brought on from one America.
Speaker Change: Positive Sentiment, and it's a team I want America that we really like. We've welcomed that team and they've been acclimated in a big part of what we're bringing to the marketplace. Thanks for the question.
Thank you. Hope we'll call her.
Speaker Change: In second on on spread income, Mike, I think you talked about a little bit of transition to fix, but I think the yield came in a little bit better than where I was expecting and perhaps I thought one America general account assets might have a lower blended yield. So just wonder if there was any repositioning related to the one America block or what's the outlook on the portfolio there. Yeah.
Speaker Change: Now it's really just how the insurance transactions work where given that rates were up versus when a lot of that business was brought on for one America market values were below book and so when that comes over to Voya we bring it over at market and so when you're looking at yields like it's the yields are just elevated but it's not it's not changing the overall income it's not changing how we're thinking about you know that 75 million as it relates to the opportunity to do more around that general account you know we continue to
Speaker Change: to see that, but we'll take some time to work through that .
Speaker Change: Our next question is from Kenneth Lee with RBC Capital Markets, please proceed.
Kenneth Lee: Hey, good morning, and thanks for taking my question. Peltiers, if it's been asked, I've been hopping between calls.
Speaker Change: Just one on investment management, the Net inflows within the institutional channel.
Speaker Change: Granted, it's probably a little lumpy but were there any outsized? [inaudible]
Investment Mandate that we're funded in the quarter there, thanks.
Speaker Change: Our long-term goal of higher than 2% organic growth rates. So as you mentioned, the drivers importantly were quite broad across channels and products. So I would say it's not lumpy and it caught a few different areas first.
Speaker Change: In private assets, private fixed income continues to be an area where we're a leader in the market.
Speaker Change: as well as in private equity secondaries, where you've seen market demand and we also have a strong value prop there, Mike Rufferstad and his opening comments as well.
Speaker Change: I'm in broader fixed income, core and core plus, an area of strength where there's market demand and more broadly, there's been more vigor in the COO market, which we actively participate in.
Speaker Change: and then lastly an income and growth very differentiated strategy that resonates globally. So the combination of those three more than offset what we continue to see in active equities which is a modest headwind in the future.
Speaker Change: But it's really broad across both channels and in product type and we think that that is that make us confident as we look for we continue to resonate with clients across product and channel.
Great, very helpful, that's all I had, thanks again.
Speaker Change: Our next question is from Suneet Kamath with Jeffries, please proceed.
Suni Kamath: Hi, thanks. I wanted to go back to voluntary. You talked about the loss ratio creeping up as
Suni Kamath: You know, you make your customers more aware of the benefits that they're purchasing. My question is, is that something that is solely driven by Voya or is there some impetus from the regulators to try to get lost ratios better closer to where you guys have filed for? All right.
Suni Kamath: Hey, Suneet, it's Mike. Now, look, we are taking very deliberate business actions to increase utilization and customer value. We talked about that last year. Nothing's changed there. We do that through a variety of ways on how we make sure that our clients understand that they have these products, how to notify us, and also work that we're doing with other carriers to have that happen in a more automated way. And so the only thing I would make sure that's clear here is just in despite those actions, there's not...
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Suni Kamath: Okay, and then just sticking with the volunteery, just on that last point about strengthening reserves, first, what is it about the macro that is causing you to do that? I mean, I just think about the lines that you're in and I'm trying to connect
Suni Kamath: You know, weak macro with elevated utilization, and there's just something I'm missing there. And relatedly, is that IV&R that you booked in the first quarter? Is that sort of a one and done? Or are you expecting that you would continue to do that in 2Q and 3Q? You had a comment that I quite understand in your answer to an earlier question. Thanks.
Heather Lavallee: Yeah, Suneet, it's Heather. Let me start and then I'll let Mike add on. So when we talked about, you know, macro or sort of economic impact
Speaker Change: It's not relating to equity markets. Really what we're referring to is that when you see economic uncertainty and if there's an impact on unemployment, there are times where you see higher benefits utilization. So that's really what we're looking ahead to and just making sure we've got a very cautious you on that would be higher utilization from behavior of end customers, not relating to equity or spread. [inaudible]
Speaker Change: Thank you. Yeah, just to the second part of your questions, the need, like think about us holding the additional IBR in the first quarter, the second quarter, the third quarter, and so we'll get to the fourth quarter. We'll see how utilization ultimately plays out to Heather's point. There could be economic uncertainty that [inaudible]
Speaker Change: You know, affects that, and so we think it's absolutely the prudent thing to do but that will reveal itself in second and third quarter, not just the first [inaudible]
Speaker Change: As a reminder, to star one on your telephone keypad, if you would like to ask a question, our next question is from Alex Scott with Barclays, please proceed.
Thank you, morning.
The first thing I have is on leave management. [inaudible]
Speaker Change: Can you talk about, you know, how much is in the run rate right now for the spend that you guys are...
Speaker Change: Planning on there and your hell out of ramp up to the...
Rest in peace
Speaker Change: Deer, and maybe also just the amount of revenue you ultimately think can come in from-
from those initiatives.
Transcription by CastingWords
Speaker Change: Yeah, thanks Alex. We'll let Mike talk about the expenses and then Jake can give just kind of maybe a broader view of how do we think about leads strategically within our health business.
Speaker Change: Yeah, so nothing's changed here, Alex, on the 50 million expected spend on leave. One thing I would point out is that part of that's gonna...
Speaker Change: Come through the admin expense line, part of its coming through premium tax and other just because we do have an existing service arrangement with our current partner around this ultimately next year this will all come through admin but at least for now you'll see it through both lines.
Jay Caterson: Next year, we would expect similar levels of spend, except that it will come down on some of the vendor and tech spend other than what's getting amortized through the P&L. But then we'll also be gearing up as we continue to sell more business. More to come before we start talking about how things are going to evolve in 2026. That's something we can update you next year on, but Jay, we're going to talk a little bit about leaf. Thanks Mike Alex. Appreciate the question. Maybe just as a reminder, we are in the leave and absence business today. Thank you.
Jay Caterson: You know, really what we're excited about is this opportunity to enhance the customer experience by insourcing.
Art Disability in Absence, Business
Jay Caterson: Really, what state-of-the-art set of capabilities? I'll talk to you a little bit about the why.
Jay Caterson: You know, bond billing is becoming increasingly more important to our customers and we think our lead capabilities will enhance our ability to bundle solutions to our customers.
Jay Caterson: More efficiently, I mean 100% of our lead cases today, Alex have life and disability and 72% of our lead cases also have supplemental
So we know it's an important investment.
Early feedback or receiving from clients is favorable.
Jay Caterson: The implementation side, our lead capability is on track
Jay Caterson: for implementing new customers, 1-1-26, and it's early, but we have our first leave sales.
Speaker Change: Thanks for that. My follow-up question is on net blows in the Wall Solutions business.
Speaker Change: Can you help us think through one America and just, you know, if there's any shock labs, we need to consider as the stuff comes off of the TSAs, as well as maybe just some views on on flows for the, you know, sort of poor legacy part of...
Thank you for the business.
Speaker Change: Yeah, let me start Alex and I'll talk to you to Jay. So for one America, if you recall, we talked about a 90% retention rate on the Book of Business through 1st quarter.
Speaker Change: What we're seeing on retention for one America is very much in line with that [inaudible]
Speaker Change: You know, as we said on the call, we are encouraged by the results that we demonstrated in wealth, but you know, what would expect things to moderate a bit throughout the year given some of the lumpier natures of a large record keeping clients, but James, love for you to build. [inaudible]
Speaker Change: You think about commercial activity? It's weighted towards the first half of 25. We're not expecting to repeat the same degree in the second half [inaudible]
Speaker Change: with respect to some of these large record keeping plans, but they're episodic in nature, and we'll take advantage of them and price them well when we see the opportunity. Thank you very much.
Speaker Change: You know, this this saw full service pipeline increased seven percent versus same time last year, heavily driven by our emerging market segment [inaudible]
Speaker Change: You know, with higher equity markets, it helped you want performance, but the business also benefited from market sentiment as you referenced around one America. We also had strong retention in the high 90s and a growing pipeline. .
Speaker Change: We've reached over 9 million participant accounts in the first quarter, you know, today we've stayed very close to the market, you know, we haven't seen meaningful shifts in the participant behaviors in this volatile market, but we're going to continue to monitor this as the markets unfold.
Speaker Change: Yeah, and let me just take a broader step back Alex right as we think about commercial momentum across the world.
Speaker Change: Wealth and asset management. We're certainly encouraged by the results in the quarter but just given the murkiness of the outlook and what's going on in the market. We're going to take cautious views. We think about the rest of the year and we'll just continue to update you on the progress as we see the year unfold.
John Barnage: Our next question is from John Barnidge, with Paper Sandler, please proceed.
John Barnage: Good morning, thank you for the opportunity. Given the dynamic macro environment, wanted to ask about the six million and seven and the quarter, where was that located business wise and how do you think about the need for further severance?
John Barnage: Hey, John , thanks for your question. Detailed one, but a good one nonetheless. Yeah, look, we continue to manage expenses.
John Barnage: John , and you could see that reveal itself in some of the severance in the quarter. Nothing uncommon or a natural to call out there. Didn't necessarily specifically affect one business versus another. But this is something, you know, Heather, Jay, Matt, myself, the entire team continue to focus on. But I wouldn't expect big severance numbers necessarily popping out in the second, third, or fourth quarter. Stay tuned.
Speaker Change: Thank you. My follow-up question on investment management, strong flow performance in the quarter. Was there any capturing of AUM for sconset read that showed up in the flow results in the quarter?
Unknown Speaker.
Speaker Change: Yeah, thanks, John . This is Matt. Skonset is a part of it. Very, very excited about the floor path there. Where we're providing assets in the Skonset is more on the private assets side. So it takes time to originate that. So Skonset is a component. It's not one that was outsized in the quarter and we expect.
Speaker Change: That will build over over a couple of years. And we've talked about that being on the magnitude of a 1 to 2 billion over time. So it's a component we continue to have strength in the insurance business. Again, the insurance business more broadly. Thank you very much.
Speaker Change: What's the component of the quarter? The real takeaway is that the flows were driven by a breadth of different client types, different client channels across a lot of different products. Wisconsin said an insurance part of it, but the breadth is really the call out there. Thank you.
Speaker Change: That is the end of our question and answer session. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.