Q2 2025 Voya Financial Inc Earnings Call
Good morning. Welcome to Voya Financial second quarter 2025 earnings call. All participants will be in a listed 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 the star then 1 on your touchtone phone to withdraw your question. Please. Press star 2. Participants are limited to 1 question and 1 follow-up. Please, note this event is being recorded.
I now like to turn the conference over to manyu head of investor relations. Please go ahead.
Good morning and thank you for joining us this morning at Voya financials. The second quarter 2025 earnings conference call.
As a reminder material, for today's call are available on our website at investors. Voya.com
We will begin with prepared remarks by Heather Lavallee, our Chief Executive Officer, and Michael Katz, our Chief Financial Officer.
Following that prepared remark, we will take your questions.
I'm also joined on this call by the heads of our businesses. Specifically, J, kadison, CEO of workplace Solutions. And Matt Toms CEO of investment management.
Turning to our earnings presentation materials that are available on our website.
Slide 2 will have some comments during today's discussion that may contain forward-looking statements and refer to certain non-gaap Financial measures within the meaning of federal Securities Law.
Gap. Reconciliations are available in our press release and financial supplement sounds on our investor relations website.
And now, I will turn the call over to Heather.
Thank you, many, good morning. And thank you for joining us today.
Let's turn to slide 4.
In the first half of the year, our business model has proven its strength.
Driven by discipline execution and our commitment to helping customers navigate a dynamic macro environment. Our retirement and investment management. Businesses are delivering attractive returns
Reinforcing the value of our integrated approach to serving our clients.
And employee benefits. We continue to make progress on margin improvement, moving toward the levels of performance that historically defined this business.
We are operating from a position of strength with solid capital and liquidity positions that give us the flexibility to invest in growth while maintaining a healthy balance sheet.
This Foundation enables us to deliver long-term value.
Positioning Voya not just for today's environment, but for the growth opportunities ahead.
Turning to fly 5 for highlights from the quarter.
For commenting on our results, I want to share an important update on how we describe our workplace businesses.
We're returning to our prior, segment names with retirement and employee benefits replacing wealth Solutions, and Health Solutions respectively.
These industry aligned names, better reflect the services and solutions Voya provides today.
Moving to our results, we're encouraged by another solid quarter of performance across our businesses.
With strong contributions from each of our core segments.
In the second quarter, we achieved a major Milestone surpassing 1 trillion dollars in total assets, across our retirement and investment management businesses.
And we're now approaching nearly 10 million participant accounts in retirement alone.
This accomplishment reflects the trust we have earned from our customers and the value. Proposition our integrated model provides
In retirement, we delivered another strong quarter, generating approximately $12 billion in total defined contribution net flows.
Year to date. We have increased overall assets by more than 100 billion.
Including 40 billion dollars in organic flows and 60 billion dollars in assets. Onboarded from 1, America.
Investment Management generated approximately $2 billion in net flows in the second quarter.
Continuing a trend of positive organic growth.
We continue to see momentum across both institutional and Retail channels.
Strong investment performance platform, breadth, and diversified client base continue to differentiate Voya Investment Management.
Beyond these strong financial results. We continue to advance our strategy. This quarter by driving greater value for our customers.
We partnered with Blue Owl, Capital to meet Rising demand for private Market access.
Leveraging, complimentary capabilities across our investment management and retirement businesses.
This expands our retirement offering and helps plan sponsors and participants pursue stronger outcomes through broader investment choice.
The 1 America's on track.
For delivering on our full year target of $75 million in operating earnings, while deepening relationships with new customers.
In addition.
We have announced a new selling agreement with Edward Jones.
This partnership opens the door to future growth through one of the country's largest adviser networks.
it reinforced the Strategic value of the 1, American acquisition, and our ability to meet the needs of our plans sponsors
An employee benefits update: We're making steady progress with insourcing lead management.
Our expanded lead capabilities, help to solve an increasingly complex issue for employers.
This enhancement combined with a breadth of our benefit offerings, strengthens our competitive position in delivering bundled solutions for employers.
In stop-loss, we saw another quarter of positive claims development and we remain focused on improving margins.
We are encouraged by our performance in the quarter.
We will continue to focus on executing on our near-term priorities and our optimistic about our growth opportunities ahead.
With that, I'll turn it over to Mike to walk to the financials in more detail. Mike.
Thank you, heather.
Let's turn to our financial results on slide 7.
We generated adjusted operating earnings per share of $2.46 in the second quarter.
A 13% increase over the prior year.
This result reflects the progress we are making on our near-term strategic priorities, including.
Improving margins and stop-loss, strong commercial momentum and integrating 1 America.
Net income was impacted by investment losses and Severance expenses.
However, cash generation is still ahead of plan.
We incurred 18 million of 7 expenses.
In the quarter.
These actions are an outcome of the reallocation of resources to our strategy.
As we look to the second half of this year, we will balance, ensuring we are achieving our financial targets while accelerating future profitable growth.
We added approximately $200 million in excess capital in the quarter and have generated approximately $400 million year to date.
With that, let me turn to our segment results.
Turning to retirement on slide 8.
The second quarter was highlighted by continued commercial momentum, driving further organic growth and higher earnings.
We continue to make progress integrating 1America, which has nearly 10 million participant accounts across retirement.
Retirement generated 235 million of adjusted operating earnings in the quarter and over 860 million in the last 12 months.
This represents an increase of 10% and 19% respectively, over the prior year.
Higher, net revenues were driven by growth in fee-based margins as our platform continues to attract new flows and gain scale.
Spread-based revenues also remain resilient in the quarter due to improved portfolio, yields and higher participant fund transfers into the general account.
We generated approximately $12 billion in total defined contribution net inflows in the second quarter, bringing our total year-to-date net flows to over $40 billion.
The strong commercial result includes positive full service, net flows before 1 America.
And strong success in the large Market, including a large recordkeeping win in the quarter.
Looking ahead. We expect outflows in the third quarter driven by a large plan surrender and recordkeeping.
Turning to Investment Management on slide 9.
The second quarter, demonstrated, strong organic growth, and favorable financial performance.
Adjusted operating earnings were 51 million for the quarter and 214 million over the last 12 months.
This represents an increase of 2% and 15% respectively, over the prior year.
Our Diversified platform scale and breadth of product offerings, continue to drive organic growth at strong margins.
We generated second quarter net inflows of approximately $2 billion, contributing to year-to-date net flows of nearly $10 billion.
Our institutional business, generates strong and steady demand for our suite of public and private fixed income Solutions.
These solutions continue to strengthen our leadership position, including key strategic focus areas such as insurance asset management.
Our retail, net flows, contributed nearly half the net inflows in the quarter and approximately 1/3 year to date.
We are buoyed by the momentum across both domestic and international retail channels.
These results are an outcome of the experienced leadership, team, delivering strong investment outcomes for our clients.
Turning to employee benefits on slide 10.
We continue to improve margins in employee benefits.
Adjusted operating earnings for this segment, were 69 million in the quarter up. 15% over the prior year quarter.
We have lowered our expected loss ratio for the January 2024 cohort by 200 basis points to 91%.
This was driven by claims experience in the second quarter.
This cohort is now over 95% complete, and will be nearing completion in the third quarter.
For our more recently. Priced January 2025 stop-loss cohort. We continue to hold Reserves at an 87% loss ratio. No change from the first quarter.
As a reminder, it is early in the development of this cohort experience will be more credible. Later this year,
In group life and voluntary, favorable claims experience in the second quarter, led to improved loss ratios.
As we look forward, continuing discipline in underwriting and risk selection remains our top priority. We continue to embed industry data and medical trends into our pricing while delivering a market-leading portfolio of benefit solutions for our customers.
Turning to slide 11.
our balance sheet is well positioned and within the approximately 200 million of excess Capital, we generated in the quarter,
we returned over 40 million of capital to shareholders via common stock dividends, and enter the third quarter with approximately 300 million of excess capital.
Turning a slide 12.
We've now generated approximately 400 million of capital year to date above our 90% Target.
The first half positions as well to achieve our plan to generate over 700 million of excess capital for the full year.
In the third quarter, we will resume share repurchases targeting 200 million in the second half of 2025 as planned.
Looking forward we are focused on executing our near-term. Priorities generating consistent, strong free cash flows and executing on our balanced approach to Capital deployment, which maximizes shareholder value over the long term.
Now, turn it back to Heather.
yes, Mike
Turning to slide 13.
This quarter, we made meaningful progress in our priorities, delivering strong, first half results across our businesses.
Our priorities for the remainder of the year are unchanged.
Driving strong organic growth in retirement and investment management.
Successfully integrating what America to drive higher earnings.
And meaningfully improving margins in employee benefits.
as we look ahead for executing with purpose,
Helping our customers achieve their goals while generating strong cash flow across our businesses.
I want to thank our team for their continued focus and hard work.
And with that, we'll turn the call over to the operator so we can take your questions.
Thank you. We will now begin the question and answer session to ask a question. You may press the star, then the 1 on your touchtone phone.
A reminder, participants are limited to 1 question and 1 follow-up question.
1 moment while we pull for questions.
Our first question is from Elise grinspan with Wells, Fargo. Please proceed.
Hi thanks. Um, good morning I guess my first question um is on um just the stop-loss business. Um I was hoping to just get you know some you know more color. Um and just what led you to bring down the 24 block again, this quarter. Um just how 25 is looking. And then as the expectation, um, still that you guys would expect to, you know, get back to Target. Um, Target loss ratio is on that business in 2026.
Good morning. Eliza, Michael start and take your question. Hi, Elise.
So,
First, I'll just start by saying stop loss continues to be a high priority for Heather. Myself J the entire management team. We continue to be laser focused on The Prudent actions. We've been taking across reserves pricing risk, selection underwriting. You asked first about the January 2024 business? We did reduce the ibnr and the quarter the reserve levels from 93 to 91% as a targeted loss ratio. And that's just simply based on the claims experience that came in the quarter. So as we come out of the quarter, We Believe 91% is the appropriate amount. Uh you also asked about January 2025
What I would say on that is very, very early in the development of that cohort, we would estimate that. It's approximately, 15% 1, 515% complete. And so as we step back and we think about Reserve levels going forward, it is a very uncertain backdrop and the healthcare industry. And so as we approach the reserving, we're going to continue to take a prudent approach. As we see that play out for the balance of this year.
What we like about this business is its annually renewable, which allows us to take decisive actions around rates, risk selection and the way that we're approaching the pricing is to get back to Target loss ratios. In the last question you had at least, what do you still continue to expect it to be a 2-Step process. That is our goal. We're coming out and trying to price every piece of business such that we get back to Target margins. But again, we have this very cautious mindset heading into the fall and I would just finish by saying the entire mindset of the entire team is that we're going to prioritize margin over growth.
Thanks. And then, um, my second question, I guess is on Capital. Um, I know you you reaffirmed, um, the buyback View for the second half of the year, but then for 26, um, I think there's like 160 million that could be due to 1 America. Not sure. It sounds like you guys are on track with that deal. So I guess expectations would be that that's paid out next year is, is that going to impact? I guess. 26, Capital return, or should we think of 26 being, you know, more in line with, with historical levels than 2025?
In terms of share repurchase. Yeah, hi Elise. Ya know, makes sense. It makes sense and and and look we're gonna we we believe it's prudent to stay on plan for repurchases. We talked about 200 million in the second half. The capital we generate in the second quarter, the capital we've generated in the first half, puts us in a good position to do just that. And then as you alluded to, uh, we we exit 2025. Well, positioned with sufficient Capital to address, 1, America, and the earnout that's expected uh, in the in the middle of next year. Now, I would say just as a quick aside, 1 America fully on track. You know, we hit that in the prepared remarks and as it relates to just next year, you know, more to come on. How we think about the deployment of capital, we come into it, uh, in a position with a balance sheet, that's healthy, a balance sheet, that's strong and businesses that continue to generate a lot of capital. And I, I would just finish by saying, you know, 2025 is a, a good example, about balance Capital employment. But we think about what we deployed, and what we're actually,
Executing both from an organic and an inorganic perspective. But then also finishing the year with the share repurchases that we signaled on the call. Yeah, and Elise, it's Heather. If I can maybe just build a few points on Mike's comments, you know, I'll reiterate, we're going to continue to take a balanced approach to capital as we think about 2026. But we also expect to continue to drive higher cash flow generation heading into 2026. Um, a couple of things that I would point you to think about, you know, where would what are? What are the, uh,
The, the high margin, high growth opportunities within wealth and are, well, positioned to build on the base. Second, I would point to is, uh, retirement Roll-Ups, uh, we're going to be, uh, opportunistic around this. You know, you certainly can't predict inorganic, um, but but we think that the 1 America's been a terrific, uh, uh, addition to, uh, to Growing our retirement business in, very attractive for shareholders. And the third area that I would point to is, uh, investing in automation across the organization. Um, we're certainly going to take advantage of, uh, AI capabilities and to drive efficiencies that create sleeves of spend that allows us to reinvest in higher growth areas. So, um, just want to reiterate the fact that we, we continue to see some really nice Catalyst for growth heading into 26.
Our next question is from John barnidge with Piper Sandler. Please proceed.
Good morning, thank you for the opportunity. My first question. Uh, can you maybe talk about the Blue Owl partnership and opportunity what it means for retirement? Do you anticipate maybe some co-branding of products as options? Thank you.
Combination of, uh, Jay and Matt will have some comments.
Thanks John for the question. Um, we're really excited about the blue, a partnership, you know, when we think about about what Matt and I and, and the IM team were were able to develop through this partnership, is really is a lot of mutuality of interests. And we're on our front foot here, this partnership, you know, John's going to let us expand the access to private Investments. As you heard Heather open with. With that said, you know, we are paying attention to the regulatory environment and any developments that may impact our business.
Specifically. Today, we're we're currently developing cit's, that will soon be on the Shelf. It's going to start with our advisor managed accounts, and it's going to be embedded in our Target date funds.
So the BlueOut partnership really does better position us to meet what I would say is an expanding need of our customers and plan sponsors.
But Matt anything you build on, ya know, it completely agree. Jay, we look forward to building products together. Uh for retirement plan participants. Um, this will include within Target date uh products or the combination of voyage areas of expertise, pair very nicely with blue house, broader and complimentary private strategies. Um, our Focus will be on risk adjusted returns uh, as well as attractive returns, net of fees, that's critical for the outcomes for retirement plan, participants. Um, when we think of that'll be a benefit to the entire space and open up the retirement landscape in a very beneficial manner for active managers. Um, we also look forward to Opportunities within the insurance channel, uh, where the breadth of our complimentary capability.
Abilities and structuring capabilities, uh, really provide a differentiated value prop for our clients. Um, so in some it's the early feedback from our clients is quite positive and and we look forward to building the partnership.
My follow-up question would be on the distribution partnership with Edward Jones, will those products and the full product Suite be available through that.
Yeah, thanks John. So, you know I'll just start and and you know this was 1 of the other attractive aspects of 1 America's by 200 million the earnings by 75 million. But we also talked about the attractive capabilities uh and the Edward Jones partnership being 1 of them. But I'll turn it to Jay to to to elaborate
Great job. Thanks for this for the question. Um, if you think about 1 America's for about 10% of the retirement business in the contribution today is pretty consistent with that, 1 of the big advantages that we saw with, with that acquisition, um, was the partnership programs with some certain key advisor, firms like Edward Jones. We were successful in the second quarter and and executing a selling agreement. And and we like this relationship, we think it's going to help us drive more full service sales, the partnership programs you should think about them helping us expand our distribution footprint and it's they really are going to be a key driver of growth for the retirement business. Um, in the second quarter, I spent a lot of time
Time with our intermediaries and plan sponsors that came to Voya through the 1 America's products, our services, but more importantly, our people um as part of that transaction. We acquired some great people and relationship managers. And and so the consistency and retention of those relationships, as you see in our numbers, um, are are starting to are starting to show themselves. So again, we'll come back as more of these, these distribution relationships. Um, um, get get executed.
Our next question is from Tom Gallagher with evercore, isi, please proceed.
Good morning. Um, I just wanted to ask a few questions on medical stop-loss.
Um, now I know it's early in the 2025 accident year, but I there were essentially 2 components as I think about to improve.
The outcomes this year and then to next year 1 was re-underwriting the book and wrist selection and the second was just getting enough rate. Broadly speaking on the Medical Loss cost Trend. So I guess my my question is
what do you what's the broader kind of macro?
Development you're seeing so far because I assume you don't have enough seasoning on your own book, but you probably do have some inputs on Medical Loss cost trend.
Uh, more broadly, and that's probably informing your your pick and why you left it at 87. So you're still seeing that same level of elevation in Lost cost Trend where you reinsure. Um, that's question. Number 1 and number 2, how is the risk selection gone so far based on and maybe that's early but I just want to get a sense for. Does it look like you got it right in terms of the you know, the non-renewed business versus that which you retained? Thanks.
Thanks Tom. Uh we'll let uh Mike take your question. Yeah, it's um look. Look I first I'd say it. It's it is still uncertain out there. I think to what you're trying to drive at is, you know, how do we see ultimately what we price for materializing and the results and and you you when you when you're pricing, you're always taking a forward. Look at forward-looking approach. And maybe the 1 thing, I would say that continues to give us uh the posture of, you know, making sure that we want to see this play out. Is that
We expect first dollar medical inflation to increase in 2026 relative to 2025. You know, we continue to feel good about what we did heading into January 2025. You hit the two pieces where we were very prudent around the rate that we went after; we were very proven around underwriting and risk selection. But it's just too early. I think we'll have a better sense of where 2025 ultimately lands later this year. You should think of Q4 as kind of the first key moment where we're going to be approximately two-thirds, maybe 70% complete. So we'll have a much better sense, but there's a lot of noise, you know, Tom, in the healthcare arena, and I think right now it's just too early to signal anything different than what we have up.
Got you and and and Mike anything on the wrist selection because I think they're that was more unique to Voya not so much of a broader Market issue. Do you feel like the initial indications on the changes in the business you lost is playing out as you as you thought or any any colored or light you could shed on that?
Yeah, and Tom you're you're alluding to the point that we we made around known claims being a piece of what drove the unfavorable experience last year and just for those not close to this. That's where you ultimately would see a claim from a prior year maybe younger cancer where the opportunity for that to continue into the next calendar year is higher, that was absolutely a focus with the underwriting teams, you know, going into the year, but they're still when you think about, uh, selling gene therapy drugs, when you think about, uh, younger cancer, still being kind of an area of higher frequency, and we, we continue to feel that the 87% is the appropriate level for January 2025. Yeah. And, and Tom, if I can add, it's Heather. Um, you know, I think the, the punch line on stop-loss is we're making meaningful progress, but we're not taking your eye off the ball.
And if you think about what's going on in the broader landscape, some of the things we're paying attention to this is more going into the 1126 pricing. Season is just, um, you know, what's going on with first dollar expenses. Um, what we're seeing in trend on high dollar drugs as well as, uh, paying attention to provider billing, and just seeing if that has any impact on 1126 pricing and um, you know, what I would, uh, reinforce that Mike talked about earlier is that going into the 1126 pricing season? We are assuming that medical trend is going to be higher than we had assumed it a year prior and so that's why Jay Mike, our entire teams, we're continuing to focus in on the discipline of margin improvement, over any type of Premium growth and really the alignment between our underwriting pricing and sales teams.
Our next question is from Ryan Krueger with KBW. Please proceed.
Expecting more around 50% in in the back, half of the year at this point.
Good morning, Ryan. Yes, I think that's the base case. At least for the third quarter. We as you alluded to we we did have favorable claims experience in the quarter. We talked about last quarter that we're adding additional reserves to the tune of 150 to 200 basis points per quarter,
In advance of the fourth quarter where we see seasonality for voluntary, so we're obviously happy with the favorable claims experience in the second quarter. But no change to Outlook in the third quarter. And then we'll have a better sense for this ultimately lands at the end of the year.
and then related to this, could you give a little bit more color on on what's driving the client and voluntary premiums that they would previously had, you know,
From many years. Um, why you know?
Ryan. Can you uh can you repeat the question? You you uh you broke up a bit there.
Oh, apologies. Um, I was just asking about why the voluntary premiums are are declining this year compared to the the strong growth you would have had over over a number of Prior years.
Yeah, we'll we'll let Jay take your question. Thanks for clarifying. Thanks Ryan. Um, if you think about 2024, Ryan sales finished really strong. It, it was due to a number of, uh, a few jumbo cases. And, and you should think about, you know, Top Line is actually trending really well for the full year. 25. You know, in addition to that our ability now to bundle insource, leave Solutions sets us up. Well for 1126, that was always a desire in that in that leave investment is our ability to bundle leave. Um, if you think about, you know, with leave today and and and other voluntary products,
When you think about group involuntary and self-help, 50% of those cases are now getting bundled with leave. And so, as we think about the overall voluntary business that leaves solution will help us get access to tomorrow rfps. This has been a deliberate strategy to drive member engagement. As you think about this with, with our members and customer retention for the long term. So, always balancing Ryan, this kind of driving consumer value with the cost of servicing claims particularly, as utilization increases. But we are market leader. We're top 3 provider for voluntary with 10% market, share. Um, and maybe just in, in, in closing we've we've taken deliberate steps to align the product performance, with customer value, and Market expectations, specifically, a couple of areas. We've upgraded in force blocks, we've enhanced the benefits
And we've improved the admin experiences to actually ensure that the members are using what they buy.
When customers see early value, they stay longer as groups, stay longer with 3 plus years, we see participation rates double. So it it's going to be a solid 25.
Thank you.
Our next question is from WMA Berdis with Raymond James. Please proceed.
Hey good morning. Um some of the other alternative asset managers have cited that the 401K landscape is going to change dramatically in the near term. Could you go into a little bit more detail on how you're offering with Blue Owl works for the customer and the types of products you hope to develop in the future and additionally, would you expand your with other alts? Managers, thanks.
Yeah, thanks Wilma. We we'll let Matt elaborate. But you know really we think this is something that everything we do is really intended to drive a participant outcomes and breadth of offerings. And so we think this is just yet another example of how we can give access to private markets to our participants who just have historically have not had it but let me let Matt get into a little bit more of the technical. Yeah, thank thanks. Bulma. Um, there there is a regulatory component to this that you see in the newspaper every day. So, ultimately plan sponsors have to make choices about what they offer. Um, our announcement with the blue aisle is that we're going to work with blue aisle, who is a highly regarded partner um to build Solutions.
And private Solutions uh makes a lot of sense. Um, we'll provide better outcomes for for clients and our complimentary capabilities within boy, investment management and blue. All I think is a fantastic, um, platform to build from to your second question. Will there be other comp other providers? Um, naturally on a platform, the size of ours, you're going to have an array of providers. But we look forward to to working uh specifically with Bulow to to to deliver products and design products. Uh co-create products. We're excited about
Okay, thank you. And then, how are you thinking about the fees and the economic split on these types of products, given the sensitivity, you just mentioned. Uh, it's a few levels and 4 in 1 case, thanks.
So, so, ultimately, it's much like any active management, the way I I'd frame it is active management, uh, needs to provide a value proposition beyond the fees that are embedded. So, um, still much to be determined, think of, uh, cit's as being the, the Cornerstone and the, the vehicle of choice within the retirement landscape because of its lower fee access points. So that fee component, the expense component will work closely on these products aren't in launched yet, but we'll be working towards that. And I would tell you the entire industry will be looking at making sure that you have these long-term Investments oriented towards a, a net of fee return that's attractive. So 2 2, stay tuned but really no different than the active Investment Management more broadly
Our next question is from Senate Kamath with Jefferies. Please proceed.
Uh, thanks. Uh, I want to go back to stop loss for a second. Um, and I appreciate the color that you gave, uh, just on the medical cost trend. I guess I just want to clarify, is what you're seeing in terms of the cost trends year to date consistent with what you assumed in your January 2025 pricing, meaning step 1? Because it seems to me that a lot of health insurers are seeing an escalation in severity and frequency, which perhaps they did not anticipate, uh, which is surprising investors. So I just want to get a sense of how things are playing out versus what you built into the pricing.
Well, it might take your question.
Yeah, good morning. Shine over. I'm very consistent with what I was sharing with Tom earlier. We continue to approach.
2025 with that uncertain and kind of cautious view, given everything that's happening with, uh, the healthcare industry as it relates to what we price for what we underwrote. You know. We we came into the year feeling good about that. I think, as I mentioned earlier, we're still only 15% 1 5% through. So it's, I think it's way too early for us to, you know, get much deeper until like how we see claims ultimately plan out for the year. Um but I would say in the same breath that we put up 87% that's that's our that's our best estimate right now and as we get deeper, in the year we'll continue to update you with respect to how this plays out.
Out as Heather mentioned, just a moment ago. And and I and I shared earlier, you know, we we continue to think as we move into the fall that first dollar medical moves up, um, we are working with advisors. We are partnering with everyone that we can to make sure we have the best thinking around that. Uh whether it's selling gene or what might happen with, uh, cancer in in younger ages and making sure we have the best thinking around that. But again, this is something that we'll continue to update you in in the fall. And as I said earlier, uh, we'll have a better sense, ultimately where this 2025 block block, is heading in late, third, quarter, fourth quarter,
Okay. Thanks for that. Sorry for the repeat question. Um, and then I guess on on retirement, can you just talk a little bit about what you're seeing at the plan? Participant level in terms of withdrawals and and maybe an update. I think on prior calls you've talked about strategies to retain more assets at retirement uh, point of retirement. So just an update there would be helpful as well. Thanks,
Yeah, thanks. Well, we'll, uh, Jay take your question. We had seen some improvement and we've also, you know, as we've talked about in Prior call has been working on some product development be able to retain more of those assets but J
Market that's also um if you think about this very complimentary to our other businesses including wealth management where we continue to expand our advisor base and capabilities to serve the customers to and through retirement. So we feel really good around where our strategy is around, retention our pipeline right now, remains really healthy. We've got 25% more assets year-over-year in the final stages in the key segments. It really does underscore our value proposition. So whether it be where we are in current flows, our retention or our pipeline, it's a really strong business right now. In 25,
Sorry, anything on the participant behavior. That was kind of the root of my question as opposed to plan Behavior. Thanks
Yeah, thanks. I'll take that question. And I think what you're referring to is in Prior years, where we saw heightened participants renders with a higher interest rate environment, we have seen that, uh, begin to normalize uh, a bit in 25. So, given, uh, some of the market volatility in the second quarter, we did see more transfers from variable into fixed. Um, so, you know, that has been, um, a favorable Trend but, you know, in addition to, uh, some of that participant Behavior. We are also seeing, uh, greater uptick in some of our Target date funds, that include the general account, uh, and other products. So we see this as a combination around what's going on with the participant Behavior, as well as making sure we've got a competitive sleeve of of products, to be able to help us
Uh, to moderate some of those outflows we had seen in the general account. Hopefully that, uh, answers your question.
Our next question is from West, Carmichael, with Autonomous Research. Please proceed.
Uh Michael taking your question on expenses and Jake can just talk about just what we're seeing on some of the commercial momentum around Leaf. Yeah, good morning West. Yeah, we continue to expect that approximately 50 million of Investments aimed at the lead capability that that we're building. And I would think about that as more back half and first half, not not tremendously, but modestly higher in the second half, I would, I would also flag as you're thinking about just overall expenses, second quarter to third quarter, I think relatively flat for retirement. I am again. Modestly up in EB. The other piece to keep in mind for EB is just open enrollment so on, you know, on track for what we're trying to accomplish there and leave. And maybe I'll pass it to Jay to give us a a bit more of an update on how that's going.
Okay, great, appreciate the question. Um, if you think about the leave administration right now, it's definitely the most important capability in the market. It's leading to growth really among carriers. It’s increasingly becoming a more complex market, and the insourcing of the leave is going to help us drive our bundled solutions around group and voluntary. And that is always an intention. We knew the marketplace was going there, and we decided that the insource solution was our best way to create a positive customer experience. The early response right now from the market and from our intermediaries has been very, very positive. We are on plan to deliver the technology and the operating model to support a 11/12/26 launch. And we've already sold a number of cases 411. Um, like I referenced.
Intermediaries: One of the reasons we see this as a positive development with them is they're already placing us on their panels for sales, and that's a key trigger force. To underscore the importance of leads, I referenced it earlier: over 50% of the life and disability RFPs are being bundled with leads today. So, we're really confident that the lead, disability, and sub-health capabilities that we're developing right now for employers are going to help them manage their benefits and for employees to access support when they need it. Maybe the last part of this is, you know, bringing this integrated claims platform remains a top priority for the employee benefits business, and we will continue to come back to you with progress. But we're on plan for 11/11/26.
Great. Thank you. Um, in my follow-up Heather. I think in in response to 1 of the questions on on Capital uses, you mentioned additional additional retirement. Roll-Ups could you maybe just give us a little bit of color on the landscape in terms of, you know, how many opportunities are out there and and what kind of multiples of those businesses are demanding
Yeah, no it's a good question and and you know a bit early and and always hard to be so specific on inorganic. What I would just say is we do see that consolidation uh, continues to take place within the retirement industry. I think we're viewed as uh as a as a good acquirer um in terms of how we're going to take, you know, good care of those employees and the plan sponsor. So I think it is a constructive environment, but this is 1. That's a little bit more of stay tuned. We're going to be opportunistic. Um, we have
We have a high bar for Capital deployment, just given where our share price is trading today, so you know, stay tuned. Um, we are going to be disciplined on any, uh, inorganic moves that we would make and make sure it is something that is a highly attractive, uh, and a creative, uh, investment for us.
Our next question is from Alex. Scott with Barkley's, please proceed.
Hey, uh, I wanted to ask on investment management, uh, just the progress with the alliance partnership on like the AGI distribution. And you know, what kind of impact does that have, and is that fully in place at this point? Or is it still building uh, any color there would be helpful.
Yeah, thanks Alice. I'll start and and toss it to, uh, to to Matt. I mean, you know, we're, we're 3 years in on our partnership with AGI, um, continues to be 1. That is very mutually beneficial for both organizations as well as for the clients. And, you know, it's really that economic alignment that we have, um, between them. But let me toss it to to Matt to provide more details. Yeah, no. Thank. Thanks Alex. The fundamentals of course is is, is Heather mentioned or really driven around delivering world-class investment solutions for clients. Um, we call out the incoming growth, franchise or thematic, Equity fundamental Equity. Uh, franchises. We've seen growth in the private placement. Uh, component that's somewhere where we have a strong value prop from the investment team, as well as
Um, bottom line, you know, the relationship continues to be very strong, and I look forward to continuing to build upon it.
Helpful, thanks. Um,
Maybe in retirement, uh, you know, just with the average AUM levels and so forth. Uh, looking like the old potentially be a lot stronger headed into the back half of the year.
Yeah. How how would you think about the additional flexibility? That that provides you from a Topline standpoint and you know, to what degree, you know, would you maybe use that flexibility to invest in the business is you know as opposed to uh letting it hit the bottom line through margin.
Yeah, maybe I'll start um, you know, as we think about our priorities, for 25, we've been really clear on what we're trying to accomplish. And so, you know, I I would, I would just kind of come back to our priorities around executing on the margin Improvement, and employee benefits continuing to drive the commercial momentum uh, across retirement and investment management and the successful integration of 1 America. Um, so you know, as we think about, um, you know, that's our that's our top priority is, is to continue to execute drive a cast Generation. Um, it maybe ties back to a little bit of what Mike talked about. In terms of the severance is, we are going to continue to be good stewards of how we think about expenses. How we look for opportunities to drive efficiency that creates, uh, creates Catalyst for us to?
Able to invest in the business. So I there isn't anything specific that I would point to, um, I think the the final bit that I would mention is what has already been in the targets that I've talked about on prior calls is the modest Investments. We're making in wealth management this year, which fits inside that retirement business. Uh, and we think that's a, that's a great opportunity for us to continue to grow value. Across that franchise.
Our next question is from Josh Chancre with Bank of America. Please proceed.
Yeah, thank you. Uh, just looking to sales figures in the medical stop-loss. Obviously, it's a rebuilding stage where we think about 2026, uh, what sort of, uh, partnership do your, um, buyers look at you as having with them and, and, and, and, and do you expect to be a more, um, competitive player in the market with a real valued? Add to your, um, uh, uh, buyers needs.
Yeah, Josh let me, let me start, and then I'll, I'll toss it to Jay. So I'll reaffirm on stop-loss. The priority is not about capturing, uh, Mar, you know, market share in this business. Um, really, the partnership goes back to you think about the 50-year track record we have in the business. We've got very strong distribution Partners, but, you know, our priority remains clear and it is about that margin over premium growth but Jay, please heed. Yeah, sure, sure, sure, thanks. I appreciate. Appreciate the question.
Um, listen to that, this prioritization of margin overgrowth is is is been a kind of a cultural transformation for the team. And I, I really like what I'm seeing right now from the alignment between pricing underwriting risk and distribution. Um, you know, we have the ability to renew business annually and, and so we're constantly looking at our relationships in the marketplace are intermediaries. There are new intermediaries that are joining this Marketplace, you're seeing more and more um, companies on the smaller end of the market, thinking about with the rising cost of of of health insurance self-insuring. This Marketplace will expand and as it does, we're going to remain disciplined on our pricing and our improved risk selection. This is been a driver for us to return to profitability. When we look at the pricing discipline that I'm seeing in the market right now in the competitive pressures, I'm seeing a natural alignment with our competitors. Going to the center, more around risk capacity, thinking about what each of our
Competitors capacity is and we're seeing some of that movement in our results which we see as positive again, okay, prioritizing margin over growth is going to be our strategy and the team is focused on that.
And just one other question. When you think about the medical stop-loss business in the, um, you know, sort of Health Solutions. Um,
Area. It's very different from the other things that you're offering you talked to different uh, places within organization when you're selling it. Uh, and it's it's it's it's a different kind of product. How does the um, stop-loss business fit within the goals of the Health Solutions? Is this is this a business that Voya needs to do the other things that it wants to do and Health Solutions?
I appreciate the question.
The way we think about this, and the way we price and underwrite, this is really based on 50 years of experience in pricing and underwriting in this market. You know, the data is evolving, as Mike referenced earlier, and we are on top of some of the latest data with our advisors, but the linkage between this and the our our intermediaries and Brokers see this very much as a risk transfer of business. And so that's going to be our Focus sitting inside the employee benefits business. This is another benefit that does happen to employers to help, protect them as they're self-insuring. And so, we very much see this as complimentary to the rest of our business. Now, with that said, um, there's volatility in this business that we're managing and we have separate stop-loss teams that are on top of this business, both from a pricing and an underwriting and a distribution, and we very much look at this business while complimentary um, we're disciplined about managing and, you know, in with with the volatility that it brings
As a reminder to Star 1 on your telephone keypad, if you would like to ask a question. Our next question is from Mike Ward with UBS. Please proceed.
Thank you. Good morning. I just had a question for Matt Toms and I’m curious about the...
Outlook for flows for the remainder of the year in investment management. And then, if you could help us think about.
the fee rates. And if they were, um, you know, if your revenues were pressured by the strange Equity Market diversion in a quarter, if you could help us, think about sort of a run rate.
Yeah, thanks Mike for the question. I'm very happy with flows on the, on the quarter of 1.8 billion dollars on on the quarter. And what was the volatile Market? I think a difficult operating environment. Um, the key there is the breadth of these flows. Uh, and that's both year to date. If we think about the 9.5 billion dollar, uh, flows year to date, that's a 3.1 organic growth number for the first half. Um, and I say that we're the breadth of flows that we look into the second half is, is what makes us confident? So across channels still insurance and international are standouts for us. I think by investment platform private fixed income, our multi-asset components and incoming growth continue to show strength. So, in the first half as well in the second, half that balance and that breadth of flows. We think is a differentiator for us.
Um as far so. So I'd say the components are similar to the second half uh, as we had, as far as growth rate. We see no reason to Pivot away from that 2 plus percent longer term, organic growth, uh, rate target. Um, and and that's where we landed at in the second quarter. And we, we think the second half is likely to, to be similar down that path. As far as fee rate, um, roughly on change core work. Quarter over a quarter at 27, uh, basis points. We think that's something. We've been very successful in holding flat versus an industry headwind, but you're right the equity Market draw down in the quarter. Does provide a little bit of noise, but I do that as nothing other than noise. Uh, and and it, and it sets us up quite quite well heading into the third quarter.
Thanks Matt. Um, and then maybe maybe for Heather or J. Um, appreciate the restoring of the segment names. Um, and I guess it, it seems like now strategically and I think you've alluded to this, but you, you could actually set up an actual wealth advisory business. Maybe a segment at some point is that, you know, how we should be thinking about that and, and um, could you size at all the contribution to earnings from that from that platform? Or is it still earlier innings?
Yeah, I'll take, I'll take your question. Um, so you know, when you think about it, we have a wealth management business that is inside of retirement today, and we have for, um, for a number of years. We are calling out the capability. This has been a very important capability within our tax exempt business. Um, you know, Jay came in bringing in a lot of wealth management expertise. So I wouldn't necessarily think about this as a separate segment. Um, but like others in the space, we see this as an important growth lever inside retirement, when you think about our ability, uh, to provide more holistic, advice, and planning to our clients.
Thank you, we have reached 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.