Voya Financial's Q4 2024: Navigating Contradictions in ROE Expectations and Strategic Investments

These are the key contradictions discussed in Voya Financial's latest 2024Q4 earnings call, specifically including: Return on Equity (ROE) expectations, investment strategies in Health Solutions, ROE guidance and expectation, and OneAmerica integration and retention experience:



Strong Financial Performance Despite Challenges:
- Voya Financial reported adjusted operating earnings of $1.40 per share in Q4, contributing to a $7.25 for the full year.
- Despite a higher loss ratio in Health Solutions, earnings were driven by strong performance in Wealth Solutions and Investment Management, with a significant focus on margin expansion and strategic investments.

Wealth Solutions Growth and Flows:
- Wealth Solutions generated nearly $2 billion in defined contribution net flows in 2024.
- Growth was driven by strong commercial momentum, successful funding of large recordkeeping plans, and a solid retention rate of 98.5%, up by 60 basis points year-over-year.

Investment Management and Asset Flows:
- Voya Investment Management achieved $3.4 billion in net inflows for Q4, contributing to $12.5 billion for the year.
- The growth was attributed to strong demand across multi-sector, private credit, and investment-grade credit strategies, as well as positive performance fees and continued expense discipline.

Capital Management and Shareholder Returns:
- The company successfully returned approximately $800 million of excess capital to shareholders through share repurchase and dividends in 2024.
- The return was part of a strategic approach to capital management, with plans to increase excess capital generation in both 2025 and 2026.

Stop Loss Improvements and Strategic Focus:
- Voya Financial implemented a net effective rate increase of 21% for the January 2025 Stop Loss cohort to address prior underwriting issues.
- The strategic focus was on improving risk selection and pricing, aiming for a loss ratio improvement of 5% to 15% for the 2025 cohort.