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Introduction & Market Context
Voya Financial Inc (NYSE:VOYA) presented its first quarter 2025 earnings results on May 7, 2025, highlighting strong performance in its Wealth Solutions and Investment Management segments while showing signs of improvement in its challenged Health Solutions business. The financial services company reported adjusted operating earnings per share of $2.00, representing a 13% increase from $1.77 in the same quarter last year.
The company’s stock closed at $60.64 on May 6, 2025, and was trading at $60.24 in the aftermarket session, reflecting a slight decline of 0.66% from the previous close. Despite this modest pullback, Voya’s shares have shown resilience, trading well above their 52-week low of $52.43, though still below their 52-week high of $84.30.
Quarterly Performance Highlights
Voya reported adjusted operating earnings after tax of $195 million for Q1 2025, up from $185 million in Q1 2024, representing a 5.4% increase. However, net income available to common shareholders decreased to $139 million from $234 million in the prior-year period, a 40.6% decline. This disparity between adjusted operating earnings and net income was primarily due to investment losses, costs related to exited businesses, and transaction-driven expenses.
As shown in the following financial results summary:
The company maintained consistent capital generation of $200 million in both Q1 2025 and Q1 2024, demonstrating stability in its ability to generate free cash flow. Voya’s performance was driven by favorable Health Solutions results, contribution from the recently acquired OneAmerica business, and strong commercial momentum across segments.
Segment Analysis
Wealth Solutions emerged as the standout performer, with adjusted operating earnings increasing to $207 million in Q1 2025 from $186 million in Q1 2024, an 11.3% improvement. This segment benefited significantly from the OneAmerica acquisition and organic growth, as illustrated in the following chart:
Total (EPA:TTEF) Defined Contribution net flows reached an impressive $29.4 billion, including $0.4 billion from Full-Service and $30.2 billion from Recordkeeping net inflows, excluding OneAmerica’s contribution. The OneAmerica acquisition added over $60 billion in assets, substantially expanding Voya’s retirement business scale. On a trailing twelve-month basis, Wealth Solutions’ adjusted operating earnings increased by 23% due to strong commercial momentum and continued expense discipline.
Investment Management delivered stable performance with adjusted operating earnings of $41 million in Q1 2025, slightly down from $42 million in Q1 2024. However, on a trailing twelve-month basis, earnings increased by 15% to $213 million from $185 million.
The segment reported strong net flows of $7.7 billion in Q1 2025, reflecting growth across various clients, strategies, and channels. Over the past twelve months, Investment Management has generated approximately $20 billion in net inflows, representing approximately 7% organic growth, well above the industry average.
Health Solutions continued to face challenges but showed signs of improvement following the implementation of strategic actions to address underperformance in the Stop Loss business. The segment reported adjusted operating earnings of $46 million in Q1 2025, down from $59 million in Q1 2024.
The company highlighted improvement in the Stop Loss ratio for the January 2024 cohort, which decreased from 95% at Q4 2024 to 93% at Q1 2025, reflecting positive prior year loss reserve development. The January 2025 cohort showed a Stop Loss ratio of 87%, though management noted it is still early in the development cycle. Group Life experienced unfavorable claims in January, which normalized in February and March, while the Voluntary business reflected potential for higher utilization given the current macroeconomic environment.
Balance Sheet and Capital Position
Voya maintained a strong balance sheet with $150 million in excess capital, an RBC ratio of 385% (above the target of 375%), and a financial leverage ratio of 27.5% (within the target range of 25-30%), as illustrated below:
The company has consistently generated strong free cash flow, with a conversion rate of 90% of adjusted operating earnings, in line with its target of at or above 90%. Return on equity excluding AOCI and NOL DTA stood at 17% for the trailing twelve months ended Q1 2025, slightly down from 18% in fiscal years 2022 and 2023.
Voya’s capital management strategy included the acquisition of OneAmerica and growth investments totaling $200 million, dividend payments of $43 million, and debt paydown of $400 million during the quarter, reducing excess capital from $600 million at the end of Q4 2024 to $150 million at the end of Q1 2025.
Investment Performance and Portfolio Composition
The company’s investment performance remained strong across most asset classes and time horizons. As shown in the following chart, a significant percentage of assets under management outperformed benchmarks or peer medians, particularly in fixed income and multi-asset categories:
Voya maintains a well-diversified investment portfolio of $39 billion, with 95% of assets rated investment grade. The portfolio is structured to deliver through-the-cycle risk-adjusted returns, with allocations across private credit (24%), securitized assets (26%), commercial mortgage loans (15%), public credit (28%), and other asset classes.
Strategic Initiatives and Outlook
Looking ahead, Voya outlined three key strategic priorities: continuing to drive organic growth in Wealth Solutions and Investment Management, ensuring successful integration of the OneAmerica acquisition, and improving margins in the Health Solutions segment, particularly in the Stop Loss business.
The company’s Stop Loss strategy includes executing meaningful rate increases and strengthening risk selection, resulting in a smaller book with a better risk profile. For the January 2025 block, Voya achieved an average net effective rate increase of 21%, balancing retention of better-risk clients while securing higher rate increases on underperforming cases.
Management expressed confidence that these actions, along with enhanced analysis and risk mitigation of known claims, would drive meaningful improvement in Health Solutions margins throughout 2025.
For modeling purposes, Voya provided sensitivity analyses for various factors affecting earnings, including S&P 500 changes, interest rate fluctuations, spread asset changes, net flows, loss ratio changes, and alternative investment returns. The company also noted that 2025 preferred stock dividends would be $17 million in Q1 and Q3, and $4 million in Q2 and Q4, with lower administrative expenses expected across all segments in Q2 2025 following seasonally high expenses in Q1 2025.
Overall, Voya Financial’s Q1 2025 results demonstrate the company’s ability to generate consistent earnings growth through its diversified business model, with particularly strong performance in Wealth Solutions offsetting challenges in Health Solutions. The successful integration of OneAmerica and strategic actions to improve Health Solutions margins position the company well for continued growth in the remainder of 2025.
Full presentation:
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