Q4 2025 Voya Financial Inc Earnings Call

February 4, 2026

Speaker #1: Good morning. Welcome to Voya Financial's fourth 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 the star key followed by zero.

Operator: Good morning. Welcome to Voya Financial's Q4 2025 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 Mini Chu, Head of Investor Relations. Please go ahead.

Speaker #1: 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.

Speaker #1: 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 will now like to turn the call over to Mei Chu, head of investor relations.

Speaker #1: Please go

Speaker #1: ahead. Good

Speaker #2: morning and thank you for joining us this morning for Voya Financial's fourth quarter 2025 earnings conference call. As a reminder, materials for today's call are available on our website at investors.voya.com.

Mei Ni Chu: Good morning, and thank you for joining us this morning for Voya Financial's Q4 2025 Earnings Conference Call. As a reminder, materials 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 Mike Katz, our Chief Financial Officer. Following their remarks, we will take your questions. I'm also joined on this call by the heads of our businesses, specifically Jay Cateson, CEO of Workplace Solutions, and Matt Toms, CEO of Investment Management. Turning to our earnings presentation materials that are available on our website. On slide 2, some of the comments during today's discussion may contain forward-looking statements and 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 in our investor relations website.

Q4 2025 Voya Financial Inc Earnings Call

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Voya Financial

Earnings

Q4 2025 Voya Financial Inc Earnings Call

VOYA

Wednesday, February 4th, 2026 at 3:00 PM

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Speaker #2: We will begin with prepared remarks by Heather Lavallee, our chief executive officer, and Mike Katz, our chief financial officer. Following their remarks, we will take your questions.

Speaker #2: I'm also joined on this call by the heads of our businesses, specifically Jay Katison, CEO of Workplace Solutions, and Matt Thoms, CEO of Investment Management.

Speaker #2: Turning to our earnings presentation materials that are available on our website, on slide two, some of the comments during today's discussion may contain forward-looking statements and refer to certain non-GAAP financial measures within the meaning of federal securities law.

Speaker #2: GAAP reconciliations are available in our press release and financial supplement found in our investor relations website. And now I will turn the call over to

Speaker #2: GAAP reconciliations are available in our press release and financial supplement found in our investor relations website. And now I will turn the call over to Heather.

Mei Ni Chu: And now I will turn the call over to Heather.

Speaker #3: Thank you, Meanie. Good morning and thank you for joining us today. Let's turn to slide four. In 2025, Voya delivered strong financial and commercial results that exceeded our targets and accelerated our growth strategy.

Heather Lavallee: Thank you, Mini. Good morning, and thank you for joining us today. Let's turn to slide 4. In 2025, Voya delivered strong financial and commercial results that exceeded our targets and accelerated our growth strategy. We delivered over $1 billion of pre-tax adjusted operating earnings for the full year and significantly grew earnings across all segments. We generated $775 million of excess cash, well above our target. And in 2025, combined retirement and investment management assets surpassed $1 trillion. This achievement illustrates our scale and reinforces the value of our integrated business model. These financial results reflect our outperformance against the priorities we set at the start of the year, accelerating commercial momentum in retirement and investment management, successfully integrating OneAmerica, and improving margins in employee benefits.

Speaker #3: We delivered over a billion dollars of pre-tax adjusted operating earnings for the full year and significantly grew earnings across all segments. We generated $775 million of excess cash, well above our target.

Speaker #3: And in 2025, combined Retirement and Investment Management assets surpassed $1 trillion.

Speaker #1: $1 trillion. This achievement illustrates our scale and reinforces the value of our integrated model. These financial results reflect our outperformance against the priorities set at the start of the year.

Speaker #1: These results reflect our outperformance against the priorities we set at the start of the year and the commercial momentum in Q4. Accelerating retirement and investment management, successfully integrating OneAmerica, and improving margins in employee benefits.

Heather Lavallee: Voya's financial performance and strategic progress show the strength of our franchise and our team's consistent focus on execution. Before Mike walks through the quarterly and full year numbers, I'd like to touch on a few key highlights from 2025. In retirement, we delivered exceptional results across our business. Defined contribution net flows surpassed $28 billion, the highest in Voya's history, and our participant base is fast approaching 10 million accounts, demonstrating our expanding reach. The OneAmerica integration significantly exceeded our financial targets, while expanding the capabilities we offer clients and broadening our reach with advisors. We also continued to expand wealth management as a high-margin growth engine. The business generated over $200 million in net revenues in 2025, contributing to our exceptional financial results in retirement and helping us serve our customers to and through retirement.

Speaker #1: Voya Financial Inc.'s performance in strategic showed the strength of our franchise and the progress of our teams. Consistent execution remains our focus. Before Mike walks through the quarterly and full year numbers, I'd like to touch on a few key highlights from 2025.

Speaker #1: In retirement , we delivered exceptional results across our business , defined net contribution flows surpassed $28 billion . The highest in Voya's history our participant base , and is fast approaching 10 million accounts , demonstrating our expanding reach .

Speaker #1: The One America integration significantly financial targets . exceeded our While expanding the capabilities we offer clients and broadening our reach with advisors . We also continued to expand wealth management as a high margin growth engine .

Speaker #1: The business generated over $200 million in net revenues in 2025, contributing to our exceptional financial results in Retirement and helping us serve our customers.

Heather Lavallee: Across retirement, our strong margins reflect our scale, our focus on driving profitable growth, and our disciplined expense management as we invest in key growth initiatives. In investment management, we delivered strong results, reflecting the scale and breadth of our platform and the momentum we're seeing across the business. We delivered a record $1 billion in annual net revenue and 4.8% organic growth, well above our long-term target. Our platform is well-positioned in the areas where the industry is growing, including Private Assets, insurance asset management, and the continued expansion of our intermediary platform with Actively Managed ETFs. We're an established leader in the third-party insurance channel, built on our expertise in managing Voya's General Account. This channel continues to build momentum heading into 2026 and is a clear competitive advantage.

Speaker #1: To and through retirement . Across retirement . strong Our margins reflect our scale , our focus on driving profitable growth , and our disciplined expense management as we invest in key growth initiatives in investment management , we delivered strong results reflecting the scale and breadth of our platform and the momentum we're seeing across the business .

Speaker #1: We delivered a record $1 billion in annual net revenue and 4.8% organic growth , well above our long term target . Our is well platform positioned in the areas where the industry is growing private assets , including , insurance , asset management and the continued expansion of our intermediary platform with actively managed ETFs .

Speaker #1: an We're established leader in the third party insurance channel built on our in managing general account . This channel continues to build momentum heading into 2026 , and is a clear competitive advantage .

Heather Lavallee: Our record net flows in 2025 drove AUM to $360 billion, highlighting both the competitiveness of our offering and the trust our clients place in our investment capabilities. In employee benefits, we made meaningful progress in improving margins and expect further improvement this year. In stop loss, we've increased our rates, enhanced risk selection, and been disciplined with reserving. Our actions position us well for 2026. Across the enterprise, our results this year reflect the competitive strength of our franchise and the progress we're making against our strategic priorities. Our strong performance drove significant cash generation and positions us well to further increase excess capital in 2026. Together, our growth in excess capital and strong balance sheet gives us flexibility to deploy capital to the most value accretive opportunities.

Speaker #1: Our net flows in 2025 drove AUM to $360 billion, highlighting both the competitiveness of our offering and the trust our clients place in our investment capabilities in employee benefits.

Speaker #1: We made meaningful progress in improving margins and expect further improvement this year in stop loss. We have increased our rates, enhanced risk selection, and been disciplined with reserving. Our actions position us well for 2026.

Speaker #1: Across the enterprise, our results this year reflect the competitive strength of our franchise and the progress we're making against our strategic priorities.

Speaker #1: Our strong performance drove significant cash generation and positions us well to further increase excess capital in 2026. Together, our growth in excess capital and strong balance sheet give us flexibility to deploy capital to the most value-accretive opportunities.

Heather Lavallee: With that, I'll turn it over to Mike to walk through the financials in more detail. Mike?

Michael Katz: Thank you, Heather. 2025 marked a strong year of execution. We generated over $1 billion of pretax Adjusted Operating Earnings, $168 million higher than a year ago, and we increased Earnings Per Share 22% to $8.85. This included EPS of $1.94 in the quarter, which was up 39% from last year. These results were driven by management action throughout the year as we delivered above-plan financial results across all our strategic priorities. We continued our commercial momentum in both retirement and investment management. We significantly exceeded our financial targets integrating One America, and we achieved substantial margin increases in employee benefits. This led to approximately $775 million of excess capital generation in 2025, including approximately $175 million in Q4.

Speaker #1: With that , I'll turn it over to Mike to walk through the financials in more detail . Mike .

Speaker #2: Thank you . Heather . 2025 marked a strong year of execution . We generated over $1 billion of pre-tax adjusted operating earnings , $168 million higher than a year ago , and we increased earnings per share 22% to $8.85 .

Speaker #2: This included EPs of $1.94 in the quarter , which was up 39% from last year . These results were driven by management action throughout the year , as we delivered above plan financial results across all our strategic priorities .

Speaker #2: We continued our commercial momentum in both retirement and investment management . We significantly exceeded our financial targets , integrating One America , and we achieved substantial margin increases employee in benefits .

Speaker #2: This led to approximately $775 million of capital excess generation in 2025, including approximately $175 million in the fourth quarter. And looking forward, we expect further excess capital improvement in 2026.

Michael Katz: Looking forward, we expect further excess capital improvement in 2026. Turning to retirement, 2025 was an exceptional year, marked by record commercial results, robust earnings growth, and higher value accretion from One America. We generated nearly $1 billion of adjusted operating earnings in retirement stand-alone, 17% higher than 2024. This included $255 million of earnings in Q4. Earnings growth was primarily driven by higher fee-based revenues, which now exceed $1.4 billion. Commercial momentum and our integration of One America are driving a 21% increase in fee-based revenues year-over-year. Importantly, we finished the year with an adjusted operating margin of 40% as we both drove efficiency across the business while investing in key priorities that accelerate our strategy.

Speaker #2: Turning to retirement , 2025 was an exceptional year , marked record commercial by results , robust earnings growth and value higher accretion from One America .

Speaker #2: We generated nearly $1 billion of adjusted operating earnings in retirement stand alone . 17% higher than 2024 . This included $255 million of earnings in the fourth quarter .

Speaker #2: growth was Earnings primarily driven by higher fee based revenues , which now exceed 1.4 billion . Commercial momentum . And our integration of One America are driving a 21% increase in fee based revenues year over year .

Speaker #2: Importantly , we finished the with an year adjusted operating margin of 40% as we both efficiency across the drove business . While investing priorities that accelerate our strategy .

Michael Katz: We generated a record $28 billion of organic defined contribution net inflows in 2025, and we added $60 billion of assets from OneAmerica. Together, this supported a 30% increase in total defined contribution assets to approximately $730 billion at year-end. We now have a base of approximately 10 million participant accounts for us to serve both to and through retirement. Looking ahead to 2026, we anticipate meaningful defined contribution net inflows, underpinned by plans expected to fund in the back half of the year. And our scale and leadership position in retirement provide a strong foundation for durable fee-based revenue growth, increasing cash generation over the long term. Turning to investment management. 2025 was a year of record commercial results and revenue. Net revenues exceeded $1 billion in 2025.

Speaker #2: We generated a in key record 28 billion of organic defined contribution net inflows in 2025 , we and added 60 billion of assets from One America together .

Speaker #2: This supported a 30% increase in total defined contribution assets to approximately $730 billion at year end. We now have a base of approximately 10 million participant accounts for us to serve, both to and through retirement.

Speaker #2: Looking ahead to 2026, we meaningfully anticipate defined contribution net inflows underpinned by plans in the fund, expected to back half of the year scale and our leadership position. This will provide a strong foundation for fee retirement.

Speaker #2: based durable revenue . Increasing growth cash generation over the long term . investment Turning to management , of record 2025 was a year commercial results and revenue .

Michael Katz: Both institutional and retail revenues grew year-over-year, contributing to overall adjusted operating earnings of $226 million. This included another year of exceptional investment results as we realized $35 million of performance fees in the Q4. We generated flows of approximately $15 billion, well exceeding our long-term organic growth target of 2%, further scaling our franchise. Flows for the year were broad-based across channels and strategies. In institutional, insurance channel demand for investment-grade credit, commercial mortgage, and private credit strategies remained strong. And in retail, international demand for income and growth remained robust, while fixed income and specialty equity strategies drove positive flows in the US intermediary channel. We enter 2026 with significant momentum and are on track to deliver another year of organic growth. Turning to employee benefits.

Speaker #2: Net revenues exceeded $1 billion in 2025 , both institutional and retail year revenues grew over year , contributing to overall adjusted operating earnings of 226 million .

Speaker #2: This included another year of exceptional investment results . As we realized 35 million of performance fees in the fourth quarter . We generated flows of approximately 15 billion .

Speaker #2: Well exceeding our long term organic target of 2% . Further scaling our growth franchise lows for the year were broad , based and strategies channels in institutional channel insurance for demand investment grade credit , commercial mortgage and private credit strategies remain strong and in , international retail demand for growth remained robust , while income and income and specialty equity strategies drove positive flows .

Speaker #2: In the US , intermediary channel . We enter 2026 with significant momentum and are on track to deliver another year of organic growth .

Michael Katz: Adjusted Operating Earnings were $152 million in the full year, significantly improved from $40 million in the prior year. A key driver of this improvement included stop loss, which I will discuss in a moment. In group life, full-year loss ratios were at the low end of our target range of 77% to 80%. This included favorable loss ratios in the fourth quarter, driven by better-than-expected frequency and severity of claims. In voluntary, our full-year loss ratios were approximately 50%, consistent with our plan to drive enhanced value for our customers. Turning to stop loss. In 2025, we delivered meaningful improvement, supported by higher rates, tighter risk selection, and disciplined reserving. Full-year reported loss ratios improved by 10 percentage points from 94% to 84%. This reflects, in part, a reserve increase of $37 million in the fourth quarter.

Speaker #2: Turning to employee benefits, adjusted operating earnings were $152 million in the full year, significantly improved from $40 million in the prior year.

Speaker #2: A key driver of this improvement included stop will loss , which I discuss in a moment in group life , full year loss ratios were at low end the target of our range included loss 77 to 80% .

Speaker #2: Favorable ratios in the fourth quarter, driven by better than expected frequency and severity of claims. Involuntary. Our full year loss ratios were approximately 50%, consistent with our plan to drive enhanced value for our customers with our.

Speaker #2: to Turning stop loss in 2025 , we delivered meaningful improvement supported by higher rates , tighter risk selection and disciplined reserving . Full year reported loss ratios improved by ten percentage points from 94 to 84% .

Michael Katz: Claims experience on the 2025 book is developing modestly better than the prior year. However, ensuring we have a well-supported reserve level heading into Q1 is essential. And as a reminder, claims experience for January cohorts will move from approximately 65% to 90% credible on a paid basis through the Q1. Looking forward, we continue to embed recent experience into our pricing and risk selection. For the January 2026 business, we achieved an average net effective rate increase of 24%, above the 21% increase secured last year. Different than a year ago, we were able to maintain in-force premiums, and we have more opportunities to select our risks, with RFP volumes rising, driven by employers seeking greater certainty in their medical spend. Collectively, these actions, reserving, pricing, and risk selection, have materially strengthened our positioning and support further margin expansion in 2026.

Speaker #2: This reflects, in part, a reserve increase of $37 million in the fourth quarter. Claims experience on the '25 book is developing modestly better than the prior year.

Speaker #2: However , ensuring we have a supported reserve level well into first quarter is essential as a . And claims experience for January cohorts will move from reminder , approximately 65% to 90% credible on a paid basis through the first quarter .

Speaker #2: Looking forward, we continue to embed recent experience into our pricing and risk selection for the January 2026 business. We achieved an average net effective rate increase of 24%, above the 21% increase secured last year.

Speaker #2: Different than a year ago. We were able to maintain in-force premiums, and we have more opportunities to select as RFP risks are rising, driven by employers seeking greater certainty in their medical spend.

Speaker #2: Collectively , these actions . Reserving pricing and risk selection have materially strengthened our positioning and support further margin expansion in 2026 . Turning to slide 11 .

Michael Katz: Turning to slide 11. We generated approximately $775 million of excess capital in the full year, including approximately $175 million in Q4. This meaningfully exceeded our $700 million target in 2025. Exceptional earnings drove a more than 200 basis point expansion in our adjusted return on equity, which now stands at 18.6%. We have been disciplined with our capital in 2025, including our acquisition of One America, which is generating earnings and returns well above our original targets. More broadly, our strong balance sheet, healthy excess capital, and highly cash-generative businesses provide us significant flexibility to deploy capital in the most value-accretive way. In the near term, the best use of that capital is for share repurchases.

Speaker #2: We generated approximately 775 million of excess capital in the full year , including approximately 175 million fourth quarter . This meaningfully exceeded our 700 million target in 2025 .

Speaker #2: Exceptional earnings drove a more than 200 basis point expansion in our adjusted return on equity , which now stands at 18.6% . We have been disciplined with our capital in 2025 , including our acquisition of One America , which is generating earnings and returns well above our original targets .

Speaker #2: More broadly , our strong balance sheet , healthy excess highly capital and generative cash businesses provide a significant flexibility to deploy capital in the value most accretive way in the near term , the best use of capital is that for share repurchases .

Michael Katz: We will repurchase 150 million of shares in Q1 and expect to do the same in Q2, subject to macro conditions. Longer term, we will continue to be strategic, opportunistic, and disciplined with our deployment of capital as we accelerate our strategy. We head into 2026 with clarity on our priorities and great momentum. We exceeded our financial targets in 2025 and expect to do the same in 2026. I'll now turn it back to Heather to share those priorities.

Speaker #2: We will of repurchase shares in the 150 million first quarter , and expect to do the same in the second quarter , subject to macro conditions .

Speaker #2: Longer term , we will continue to be strategic , opportunistic and disciplined with our deployment of capital as we accelerate our strategy , head into on our 2026 with clarity priorities and great momentum .

Speaker #2: We exceeded our financial targets for 2025 and expect to do the same in 2026. I'll now turn it back to Heather to share those priorities.

Heather Lavallee: Thanks, Mike. Turning to slide 12. I want to thank the entire team here at Voya. Collectively, we delivered for our customers and positioned Voya for another strong year in 2026.... Our priorities for 2026 are clear and compelling, growing excess cash generation, maintaining balance sheet strength and capital flexibility, driving continued commercial momentum in retirement and investment management, and further improving margins in employee benefits. These priorities, and our continued focus on execution, accelerate our growth strategy and create meaningful value for our customers and shareholders. We are helping our customers build financial confidence and clearing a path for better outcomes today and in the years ahead. With that, I'll turn it over to the operator so we can take your questions.

Speaker #1: Thanks , Mike . Turning to slide 12 . I want to thank the entire team here at Voya . Collectively , we delivered for our customers and positioned Voya for another strong year in 2026 .

Speaker #1: Our priorities for 2026 are clear and compelling . Growing excess cash generation , maintaining strength and balance capital flexibility , driving continued commercial momentum in retirement and investment management , and further improving in employee benefits .

Speaker #1: These priorities and our continued focus on execution accelerate our growth and create meaningful strategic value for our customers and shareholders. We are helping our customers build financial confidence and clearing a path for better outcomes.

Operator: 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 speakerphone, please pick up the handset before pressing the keys. To withdraw your question, please press star two. As a reminder, participants are limited to one question and one follow-up question. Our first question is from Bob Huang with Morgan Stanley. Please proceed.

Speaker #1: Today and in the years ahead . With that , I'll turn it over to the operator so we can take your questions .

Speaker #3: you . We will now Thank begin the question and answer session . question , you may a star then one on your touch tone phone .

Speaker #3: If you are using a speaker, please pick up the handset before pressing the keys. To withdraw your question, please press star two.

Speaker #3: As a reminder , participants are limited to one question and one follow up question . Our first question is from Bob Huang with Morgan Stanley .

Bob Huang: Hey, good morning. My first question is on stop loss, especially regarding the reserve that you've added. Can you maybe give a little bit more details behind the reserve actions? Is it more of a you have the reserves mainly just to pad the reserves to be conservative, or is it more you're actually seeing some losses developing that would cause you to take the actions you've taken?

Speaker #3: Please proceed .

Speaker #4: morning . Hey , good My on first question is loss stop , especially regarding the reserve that you've added . Can you maybe give a little bit more details behind the reserve actions ?

Speaker #4: Is it more of a your your you have the reserves mainly just to pad the reserves to be conservative it more or is you're actually seeing some losses developing that would cause you to to take the actions you've taken

Michael Katz: Hey, Bob. Yeah, at first, just let me start by saying and reiterating what I shared on the prepared remarks. When we talk about the January 2025 business relative to the January 2024 business, it's running modestly better than where we were at this point last year. That includes when we set the reserves coming out of December and, frankly, where we stand right now. And then to your question, second, if we did increase reserves in the quarter, the importance of the claims experience in the first quarter can't be understated. As I mentioned, we moved from two-thirds complete to 90% complete in the first quarter, and the range of outcomes today is different than, you know, what I would say historically for stop loss.

Speaker #5: Hey ,

Speaker #5: Yeah . Bob . First , just let me start by saying and reiterating what I shared on the prepared remarks . When we talk about the relative to January 25th business January 24th the it's running modestly better than where we were at this point last year .

Speaker #5: includes That when the we set reserves coming out of December and frankly , stand where we now . And then to your right question , we did .

Speaker #2: Reserves in the quarter. The increased importance of the claims in the experience can't be understated. As I mentioned, we moved from two-thirds complete to 90% complete in the first quarter.

Michael Katz: You hear us talk about 77% to 80%, a 3-point range, but with this healthcare backdrop, that range is wider, probably double the normal range. And so when we look at the reserving, we think about being on the higher end of that best estimate range. Now, when we look forward and we think about the margin expansion that we expect in 2026, we certainly see that coming from not only the perspective of where we price the Jan 2026 business, 24% increase we got on that business, and frankly, from a risk selection perspective, we've gotten more opportunities. RFPs are up, and as I just mentioned, we are seeing employers look for this type of coverage as they're really trying to get certainty with their medical spend.

Speaker #2: And the range of outcomes today is different than what I would say historically for stop loss . You hear us talk about 77 to 80% of three point range .

Speaker #2: But but with this health care backdrop , that range is wider double the , probably normal range . And so when we look at the reserving , we think about being higher end best on the of that estimate range .

Speaker #2: Now when we we think about the look forward and margin expansion that we expect in 2026 , we see certainly coming that only not from the perspective of where we price the Jan 26 business 24% increase .

Speaker #2: on that We got business frankly , . And from a risk selection we've gotten perspective , are up opportunities more . And as I just mentioned , we are seeing employers look for this type of coverage as they're really trying to get certainty with their medical spend .

Michael Katz: You know, I think the big step back here right now is that when we look at stop loss, it did not take us off course for an incredible year in 2025, and the actions we've taken across a pricing, risk selection, and how we reserve for this heading into 2026 positions us to say the same.

Speaker #2: You know, I step back here, right? I think the big now is at that stop, when we look loss, it did not take us off course for an incredible 2025.

Speaker #2: Year in, and the actions we've taken across pricing, risk selection, and how we reserve for heading into 2026, this is the same.

Bob Huang: Got it. Really appreciate that. So it sounds like your path hasn't changed. So maybe a follow-up on that specifically is the 24% rate increase for the January 2026 cohort. As we go forward, obviously, that's a big rate increase. Do you feel that rate increase is enough or sufficient going forward as we think about just the broader stop loss environment, or you feel like maybe going into the next few years, there should be more pricing? Just curious, any comments or dynamics on pricing.

Speaker #4: it . Really Got appreciate that . So it sounds like your your path hasn't changed . So maybe a follow up on that specifically is the 24% rate increase for the January 2026 cohort .

Speaker #4: As we go forward, obviously, big rate—that's an increase. Do you feel that rate, your rate, is enough or sufficient going forward?

Speaker #4: As we think about broader just the stop loss environment , like maybe into the next few going years , where you feel there should be more pricing .

Michael Katz: Yeah, we do. We do, Bob. We feel, you know, when we think about where trend is, we've talked a lot about the fact that we expected higher trend in 2025 and 2026, and so we went out to get that rate. Certainly, it was easier for January 2026 than it was for January 2025, as we were ahead of many in going after that rate. But when we look at this relative to that kind of high single digit, maybe 10% first dollar trend, you lever that up around, we think, in that 20% range.

Speaker #4: Just curious, any comments or dynamics on pricing?

Speaker #2: Yeah ,

Speaker #2: we do . We do . Bob . We ? we feel when we think about where trend is , talked a we lot about the fact that we higher expected trend in 26 .

Speaker #2: And so we 25 and out to get that went rate . Certainly it easier was for Jan 26 than it was for Jan 25 , as we were ahead of of many and going after that rate .

Speaker #2: But when we look at this relative to that kind of high single digit , maybe 10% first dollar trend , you lever that up around , we think in that And 20% range .

Michael Katz: And so the other piece I'd mention, too, is that that demand we're seeing from employers that are looking for certainty of spend, yeah, we feel like as we move forward on the progress of margin improvement at the cohort level, that we're gonna have even more opportunity in 2026. Because when you look at the demand, it's up. Supply is, you know, at best, you know, limited to down.

Speaker #2: so the other piece I'd mention too is that that demand we're seeing from employers that are looking for certainty of spend , feel like as we move forward on the progress margin we improvement of at the cohort level , that we're going to have even more opportunity in 2026 , because when you look at the demand , it's up .

Heather Lavallee: Yeah, and, and Bob, it's Heather. Maybe one thing I would add, just to kind of do the broader step back on stop loss, is we've always talked about this being a two-year journey, and as Mike talked about, the $100 million improvement in earnings in 2025 is, you know, significant step in the right direction. We aren't declaring victory. As Mike talked about, we're reserving for a wide range of outcomes, but we believe we only have upside from here, which is why we have reiterated our capital deployment plans the first half of 2026.

Speaker #2: Supply is at best limited to . to .

Speaker #1: it's Heather . And Bob , Maybe one thing I would add of do the , just to kind step back on stop losses .

Speaker #1: it's Heather . And Bob , Maybe one thing I would add of do the , just to kind step back on stop

Speaker #1: This being a two-year journey. And as Mike talked about, the $100 million improvement in earnings in '25 is a significant step in the right direction.

Speaker #1: We aren't declaring victory. As Mike talked about, we're reserving for a range of outcomes. But we believe all we have from here is upside, which is why we have reiterated our capital deployment-first plans for the first half of '26.

Bob Huang: Okay, really appreciate that. Thank you.

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

Speaker #6: Okay , really appreciate that . Thank you .

Tom Gallagher: Morning. Couple of Stop Loss follow-ups. Mike, when you said your actions support further margin expansion in 26, are you—are you—is your baseline the 84% that you did for the full year, or is it the 91 action at your Loss Ratio for the Jan 25 cohort? Like, what should we be... When you say improvement, from which number, the, the 84 or the 91?

Speaker #3: Our next question is from Tom Gallagher with Evercore ISI . Please proceed .

Speaker #7: Morning . Couple of stop loss follow ups . Mike , when you said your actions support margin expansion in 26 , are you are you is your baseline the 84% that you did for the full year ?

Speaker #7: Or is it the 91 ? That your loss ratio for the Jan 25 cohort . Like , we be what should when you say from improvement which number ?

Michael Katz: ... I think it's both, Tom. Like, when you, when you think about the 84, I mean, certainly that's the reported levels of loss ratios for the full year. And as Heather just mentioned, we took the EB business from $40 million to $152 million. You know, that included progress with, with stop loss, but, but also from the 91% perspective, and I think Bob was getting at this just a moment ago. When you think about reserve levels, and frankly, we, fourth quarter is super critical when we make that assessment of where do we think the range of outcomes are. As I just mentioned, it's not a 3-point type of wideness in the range.

Speaker #7: Is it the 84 or the 91?

Speaker #2: I think it's both . Tom . Like when you when you think about I the 84 , mean certainly that's the reported loss levels of ratios for the full year .

Speaker #2: And as Heather just mentioned, we took the EBB business from $40 million to $152 million. That included progress with stop loss.

Speaker #2: But but also from the 91% perspective . And I think Bob was getting at this just a moment ago think about . When you reserve levels and frankly , we fourth quarter is super critical when we make that assessment of where do we think the range of outcomes are , as I just mentioned , it's not a three point type of wideness in the range .

Michael Katz: We think it's frankly closer to double that, and we want to be in a position here where we're at the higher end of that best estimate range. Now, we certainly need to see where things play out in Q1 and frankly, some of Q2 before we decide where this is ultimately going to land or where we see where this ultimately is going to land. But the one thing I would just kind of encourage folks to think about here is don't conflate where we're reserved at with where this ultimately lands.

Speaker #2: We think it's, frankly, closer to double that. And we want to be in a position here where we're at the higher end of that best estimate range.

Speaker #2: certainly Now , we need to see where out things play in the first quarter . And frankly , some of the second quarter before we decide where this is ultimately going to land , or will we see where this ultimately is going to land ?

Speaker #2: But the one thing I would just kind of encourage folks to think about here is, don't conflate where we're reserved at with where this ultimately lands.

Heather Lavallee: Tom, I would just add to it, if you, if you really compare where we were a year ago with our reserve levels, and about this time last year, we were close to 95, and while we're not fully complete on the 2025 book of business, you know, you see it coming in closer to that, you know, 90, 91 range, which is, which is quite an improvement. And so, you know, we do think it's prudent, given the backdrop, to do the reserve adjustment that Mike mentioned. But as you saw last year, things only went in a one-way direction, which was a positive direction. And so we see you know, we, we like the progress we made, and we see further upside from here, and improvement to build on what we delivered.

Speaker #2: And .

Speaker #1: Tom , I would just add to it if you if you really compare where we year ago with our reserve were a levels about this time last year , we were close to 95 .

Speaker #1: And while we're not fully complete on the 25 book of business , you see it coming in closer to that 9091 range , which is which is quite an improvement .

Speaker #1: And so we do think it's prudent , given the the reserve backdrop , to do adjustment that Mike mentioned . But as you saw last year , things only went in a one way direction , which was a positive direction .

Speaker #1: And so we see , you know , we like the progress we made and we see further upside from here . In improvement to build on delivered .

Tom Gallagher: No, I appreciate that color from both of you. The, my follow-up is just, if, if you look at the, I guess, the loss ratio of 91, it implies loss cost trend was up 20-ish. Is that, is that the right level you think is happening across the board for stop loss on a, on a trend basis? Or was there something about your risk selection? Did you get selected again, so you think your loss experience was worse? I just want to get a sense for, like, what did you see in the quarter? Was it, was it material worsening, or is this more conservatism? I just want to get a sense for what do you think actually happened and, you know, maybe why.

Speaker #7: Appreciate that color from both of you . The my follow up is just if you look at the I guess the loss pick of 91 , it implies lost trend was up 20 ish .

Speaker #7: Is that the right IS level? Do you think it’s happening across the board for stop loss on a trend basis?

Speaker #7: Or was there something about your selection ? Did risk you get selected against . So you think your loss experience worse ? I just want to get a sense for like , what did you see in the quarter ?

Speaker #7: Was it was it a worsening or is this more material conservatism ? get a I sense for what do you think actually happened ?

Tom Gallagher: I think people look at the 91, and they get scared because you went from 87 to 91 and think you don't have your arms around the situation. So maybe just to the extent that you can tell us how confident you are that you have your arms around the situation and you're not seeing adverse selection?

Speaker #7: And , you know , maybe why I think people look at the scared 91 and they get because you went from 87 and 91 and think you don't have your arms around the situation .

Speaker #7: So maybe just to the extent that you can tell us how confident you are that you have your arms around the situation and you're not seeing adverse .

Michael Katz: So from a risk selection perspective, you know, it's about a well-thought-out endeavor. I think when we talked about the January 2024 business, that was risk selection not where we wanted to be in any way, shape, or form. We made improvements when we think about where we were January 2025, and we expect to make even further improvements on risk selection. So it's never perfect. Tom, I think to your question around the trend, you know, as I mentioned earlier, like, we think it's in that, call it, 20% high teens level. And so it was more difficult to get rate in the January 2025 than it was for the January 2026, for the reasons that we were talking about around demand.

Speaker #2: from from So a risk selection

Speaker #2: perspective , selection you know , it's a battle . Well fought . Never one . I think when we talked about the Jan 24 business that that was selection , not risk where we be in any way , shape or form .

Speaker #2: We made improvements . When we think about where Jan 25 , and we we were . expect further even on risk to make selection .

Speaker #2: never So it's perfect . Tom , I think to your question around the trend , you know , as I we think earlier , that call it mentioned 20% high teens level .

Speaker #2: And so it was more difficult to get rate in January 2026, for the same reasons that we were talking about around demand.

Michael Katz: So when you just kind of roll that all together, you're, you know, the heart of your question, like, do we feel like we have our arms around this? Absolutely, we do.

Speaker #2: So when you we when just kind of roll that all together , you know , the heart of your question , like , do we feel like we have our arms around this ?

Operator: Our next question is from Mike Ward with UBS. Please proceed.

Speaker #2: Absolutely . We do .

Mike Ward: Thank you. Good morning. I was curious about maybe just utilizing the stop loss experience, in terms of leverage in order to sort of, you know, cross-sell other products with specific employers. You know what I mean? Like, how is that going? Is that becoming material? Is that contributing to your confidence in 2026 for the retirement side?

Speaker #3: Our next question is from Mike Ward with UBS . Please proceed .

Speaker #8: Thank you . Good morning . I was curious about maybe just utilizing the stop loss experience and in terms of leverage , in order to sort of , you know , cross-sell other products with specific employers .

Speaker #8: You know what I mean how is ? Like , Is that becoming that going ? that is material ? Is contributing to that your confidence 26 for the in retirement side ?

Heather Lavallee: Yeah, Mike, it's Heather. I'll let Jay add, but I think what's important to think about is that, you know, we're often selling employee benefit products to the same brokers and consultants, both the Stop Loss and the Voluntary. And it goes to the point of, you know, we see high demand for the products that we're offering. But maybe the last bit I mentioned before I toss it over to Jay is our teams have continued to be highly disciplined on margin over growth. So we're not, you know, leaning into anything to drive unnecessary growth, just given the market backdrop. But Jay?

Speaker #1: Yeah , Mike it's Heather I'll let Jay add , but I think what's important to think about is that , you know , we're we're often selling employee benefit products through brokers .

Speaker #1: the same And consultants , both the stop loss and the voluntary it goes to . the And point of we see high demand for the products that we're But maybe the last bit I offering .

Speaker #1: mentioned before , I toss it over to Jay is our teams have continued to be highly disciplined on margin So we're over growth .

Speaker #1: not , you know , leaning into into anything to drive growth . Just given the market But backdrop . Jay .

Jay Kaduson: Yeah. As we think through this, you know, in heading into 2026, as Mike referenced, you know, the supply at best is level, we think is actually down, but the demand is significantly up, and we're hearing that from our brokers and intermediaries. And so what it does cause is, it does cause this kind of capacity conversation of, you know, there is only so much capacity in the marketplace for coverage. And getting a more fulsome book as we think through the areas of employee benefits and where we have and are in similar segments in retirement, we definitely are changing that conversation. It's happening in front of us. We're engaged in those conversations now. We expect those conversations to continue. We are also seeing more and more from a bundling perspective.

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Q4 2025 Voya Financial Inc Earnings Call

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Q4 2025 Voya Financial Inc Earnings Call

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