Voya Financial’s Q1 Results: A Tale of Two Segments

Voya Financial (NYSE: VOYA) reported a mixed set of results for the first quarter of 2025, with adjusted operating earnings rising 13% year-over-year despite a sharp decline in Health Solutions revenue. While the company’s Wealth Solutions and Investment Management divisions delivered strong performance, driven by acquisitions and capital markets tailwinds, its Health business faced margin pressures and strategic headwinds. The results underscore the challenges of balancing growth investments with profitability in a sector where one segment’s gains can be offset by another’s struggles.

The Earnings Growth Story: Acquisitions and Discipline
Voya’s after-tax adjusted operating earnings rose to $195 million, or $2.00 per share, fueled by the acquisition of OneAmerica’s retirement plan business and disciplined cost management. The Wealth Solutions segment, which now accounts for the bulk of Voya’s operations, saw pre-tax operating earnings jump 11% to $207 million, driven by $30 billion in defined contribution net inflows and a 21% surge in client assets to $694 billion. The segment’s adjusted operating margin expanded to 39.7% from 35.7% a year ago, reflecting both revenue growth and expense control.
The acquisition of OneAmerica’s business—a deal finalized in late 2024—has clearly paid off. The integration has added scale to Voya’s retirement services, a space where economies of scale matter. CEO Heather Lavallee emphasized this progress, calling out “commercial momentum” in Wealth Solutions and Investment Management.
The Elephant in the Room: Health Solutions’ Struggles
While Wealth Solutions thrived, Health Solutions posted a 22% drop in pre-tax operating earnings to $46 million, with net revenues falling 17.1% year-over-year. The segment’s adjusted operating margin plummeted to 2.7%, down from 23.9%, as the company reduced unprofitable Stop Loss business and faced higher loss ratios. Strategic investments in Short-Term Disability and Leave Management products, while promising long-term value, weighed on near-term profitability.
The Health division’s challenges are not new—Voya has long grappled with volatile underwriting gains and competitive pressures in the stop-loss insurance market. The decision to shrink its Stop Loss book by 5% (to $3.7 billion in annualized in-force premiums) suggests a pivot toward higher-margin products, but this shift comes at a cost. For investors, the question is whether the pain in Health Solutions is temporary or a sign of deeper structural issues.
Investment Management: A Steady Hand in the Storm
The Investment Management segment offered a middle ground, with flat pre-tax operating earnings of $41 million but a 7.6% revenue rise. Net inflows of $7.7 billion (excluding divested businesses) provided a modest 2.5% organic growth rate, with momentum in institutional and intermediary channels. The segment’s margin expanded to 28.1%, a small but meaningful improvement.
Capital Allocation: Prioritizing Debt Over Dividends
Voya’s capital strategy remains focused on balance sheet strength. The company generated $200 million in excess capital in Q1, using $400 million to retire high-cost debt and returning just $43 million to shareholders via dividends. While this conservative approach limits near-term returns for investors, it aligns with Voya’s long-term goal of maintaining flexibility for strategic moves.
Outlook and Risks
Voya’s results highlight a company in transition. The Wealth and Investment segments are firing on all cylinders, but Health Solutions’ woes remind investors that success isn’t uniform. Key risks include:
- Health Solutions recovery: Can the division stabilize margins without sacrificing growth?
- Macro uncertainty: Rising interest rates and labor market shifts could impact retirement plan inflows.
- Debt management: Voya’s leverage ratio has risen slightly, though the company insists it remains within prudent limits.
Conclusion: A Buy, But With Eyes Wide Open
Voya’s Q1 results are a glass-half-full story for long-term investors. The company’s ability to grow operating earnings despite headwinds in Health Solutions—and its disciplined capital allocation—suggests management is executing its strategy. The Wealth Solutions segment’s 10.2% revenue growth and margin expansion are particularly encouraging, as they point to a sustainable competitive advantage in the retirement services space.
However, investors should not overlook the Health division’s challenges. A 17% revenue decline and margin collapse to 2.7% are red flags. If Health Solutions’ issues persist, they could drag on Voya’s earnings growth. Still, the stock’s current valuation—trading at roughly 11x its adjusted operating earnings—appears reasonable given its growth profile in core segments.
The key metric to watch: Voya’s ability to stabilize Health Solutions’ margins while maintaining inflows in Wealth. If the company can turn Health around or divest it entirely, the stock could see a rerating. For now, Voya remains a compelling bet for investors willing to bet on its long-term transformation—provided they’re prepared for near-term volatility.
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