Copyright fool
Wednesday, Nov. 5, 2025, at 10 a.m. ET CALL PARTICIPANTS Chief Executive Officer — Heather Hamilton LavalleeChief Financial Officer — Michael Robert KatzChief Executive Officer, Wealth Solutions — Jay Stuart KadusonChief Executive Officer, Investment Management — Matthew Toms Need a quote from a Motley Fool analyst? Email [email protected] Adjusted Operating Earnings Per Share -- $2.45 adjusted operating earnings per share for the third quarter, reflecting a nearly 30% increase year over year driven by growth across all business segments.Excess Capital Generation -- Over $200 million of excess capital generated in the third quarter, with year-to-date capital generation at approximately $600 million.Shareholder Capital Returns -- $150 million returned in the third quarter, including $100 million of share repurchases, with $100 million more repurchases expected in Q4 2025.Retirement Segment Earnings -- $261 million in adjusted operating earnings for Q3 2025, up 24% year over year and a 20% increase on a trailing twelve-month basis.One America Integration -- Ahead of expected revenue and earnings contributions, with $60 billion of assets acquired from One America and completion set for 2026.Defined Contribution Organic Net Flows -- $30 billion year to date, the highest since 2020.Investment Management Operating Earnings -- $62 million in adjusted operating earnings for Q3 2025, a 13% increase year over year and a 15% increase on a trailing twelve-month basis.Investment Management Net Flows -- $3.9 billion in the third quarter, totaling over $13 billion year to date, with organic growth of over 4% year-to-date versus the 2% long-term target.Public Asset Outperformance -- 74% of public assets outperforming peers/benchmarks over five years and 84% of public assets outperforming peers/benchmarks over ten years.Employee Benefits Earnings -- $47 million in adjusted operating earnings for Q3 2025, primarily driven by favorable Group Life claims and reserve management.Wealth Management Sales Growth -- 20% year-over-year sales growth in 2025 compared to 2024 with client assets reaching approximately $35 billion.Advisor Network Expansion -- Nearly 500 advisors currently, with over 100 additional hires planned by year-end at the Boston Wealth Management Hub.WealthPath Platform Launch -- New integrated technology platform launched to scale advisor guidance and expand digital self-service capabilities.2026 Capital Deployment Guidance -- Planned return of $100 million–$150 million per quarter in dividends and repurchases throughout 2026, subject to market conditions.Operating Margin Outlook -- Retirement segment margins expected to return to the midpoint of the 35%-39% target range in 2026, with approximately a 200 basis point margin impact from wealth management investment in 2026.Dividend Increase -- Fourth-quarter 2025 dividends per share set to rise by over 4%.Wealth Management Investment Plan -- Up to $75 million of excess capital allocated for 2026, primarily focused on organic investments in technology and advisor recruitment.Actively Managed ETF Launch -- supporting product expansion within investment management.Edward Jones/Blue Owl Partnerships -- Integration progressing as planned, with Edward Jones distribution commencing in early 2026 and Blue Owl product launches for retirement solutions expected by year-end 2025. Voya Financial (VOYA 3.42%) reported significant year-over-year growth in adjusted operating EPS and excess capital generation for Q3 2025, highlighting broad-based gains across core segments and disciplined capital management. Management emphasized completion of the One America integration by 2026, continued strategic expansion into wealth management with a formalized $75 million investment commitment, and full-year capital return plans supported by a strong balance sheet. Upgrades to digital and advisor platforms, planned ETF product launches, and new strategic partnerships are positioned to strengthen long-term revenue streams. Chief Financial Officer Katz said, we are well-positioned to exceed our $700 million full-year capital generation goal. based on year-to-date capital generation of approximately $600 million.The wealth management business contributed approximately 10% of total retirement revenues, with assets under management increasing from $31 billion to $35 billion over the last twelve months.Management confirmed allocation of up to $75 million of excess capital toward organic growth in wealth management for 2026, with roughly two-thirds of that from a GAAP perspective, with two-thirds amortized under GAAP and spend weighted to the year's second half.Actively managed ETF launches and expansion into alternative investments through the Blue Owl partnership are expected to provide new channels for product and revenue diversification by 2026.Employee Benefits segment loss ratio for Group Life includes IBNR in anticipation of seasonally higher fourth-quarter claims, with credibility of the January 2025 cohort projected to double in Q4, providing a clearer view on future underwriting and reserving.Full-service defined contribution retention rates remained in the high 90% range year to date, with flows and surrender rates tracking pre-flagged expectations amid One America integration.Chief Executive Officer Lavallee stated, "We're not looking to do any type of roll-ups in the wealth management space," affirming a strategy focused on organic expansion and advisor growth.Fourth-quarter shareholder returns will see more than a 4% increase in dividends per share, with $100 million of additional share repurchases anticipated. INDUSTRY GLOSSARY Defined Contribution (DC) Net Flows: The net amount of contributions minus withdrawals for retirement plans in which employees contribute to individual accounts, reflecting business growth or attrition.Excess Capital: Capital above the company’s required regulatory or operating threshold, available for distributions or strategic reinvestment.Adjusted Operating Earnings: Earnings metric used by insurance/financial companies that excludes certain non-recurring or non-operational items to better analyze ongoing performance.IBNR (Incurred But Not Reported): A reserve for claims that have occurred but have not yet been reported to the insurer, used for setting accurate liabilities in group insurance lines.Actively Managed ETF: An exchange-traded fund that is managed by professionals making active investment decisions, as opposed to tracking a passive index.Roll-Up: A strategy of growth through targeted acquisitions and integration of similar businesses, often used to scale retirement plan administration platforms.PCAPS: Preferred Capital Securities; hybrid debt/equity securities with features such as periodic dividends affecting corporate interest expenses. Full Conference Call Transcript Heather Hamilton Lavallee: Thank you, Mei Ni. Good morning and thank you for joining us today. Let's turn to slide four. We are pleased to report strong third quarter results that reflect meaningful progress in delivering on our investor value proposition. Our results build on the success we have seen year to date with adjusted operating EPS in the quarter up nearly 30%. This performance is a clear reflection of our focus on profitable growth across our diverse and complementary businesses. Equally important, we generated robust free cash flow in the quarter and remain on track to exceed our $700 million full-year target. We have continued to take a balanced approach to capital deployment across the enterprise, and Mike will share more on that in a few moments. We will also talk about how we are deploying capital in support of our enterprise strategy, growing our core markets, expanding into adjacencies such as wealth management, and strengthening the connections across our businesses. While we continue to invest in our businesses, we remain committed to returning excess capital to shareholders. As planned, we resumed our share repurchases during the quarter. Turning to page five. Let's look at how we executed on our near-term priorities this quarter. In Retirement, we delivered strong earnings and revenue growth, with full-year results trending above expectations. This performance was driven by $30 billion in year-to-date organic defined contribution net flows, putting us on track for our strongest DC net flow year since 2020 and further strengthening our market-leading retirement franchise. Investment management continues to show strong commercial momentum. The business delivered strong earnings in the third quarter, with positive net flows and continued organic growth putting us on track to exceed our organic long-term growth target of 2%. Voya's performance remains a key differentiator with 74% of our public assets outperforming peers and benchmarks over five years and 84% over ten years. Later this year, we will launch our first actively managed ETFs, further expanding our product lineup and building on our multi-sector fixed income expertise. This launch supports modernizing our intermediary platform with high-growth vehicles and expanding distribution, creating new opportunities that connect wealth management and investment management. Within employee benefits, we continue to execute our disciplined pricing strategy in stop loss, with a focus on margin over growth as we head into 2026. In October, we launched our integrated claims system to support leave management. A key milestone as we prepare for a full rollout for end-to-end solution on January 1. This will strengthen our bundled offering across group and voluntary, allowing us to deliver greater flexibility and value to our clients. Taken together, these results reflect strong execution across the enterprise and position us to carry meaningful momentum into 2026. Turning to slide six. I would like to spend a moment discussing our strategic approach to growing wealth management. Where we are making key investments that strengthen our core offerings and create value across the Voya enterprise. Today's customers are looking for support. Voya is uniquely positioned to meet those needs, building on an already solid foundation with solutions that address the growing demand for advice and planning. This is already a significant business for us, with 20% year-over-year sales growth in 2025 and total client assets reaching approximately $35 billion through the third quarter. We believe now is the time to scale this business and accelerate growth. For example, our field and phone-based advisor network includes nearly 500 advisors, and we are on track to add more than 100 by year-end at our new Boston Wealth Management Hub. We launched WealthPath, our integrated technology platform that will enable advisors to deliver comprehensive guidance and solutions at scale. And we are investing in enhanced digital self-service capabilities, which will give clients more flexibility and control. As we expand our advisor base, we will continue to partner with independent advisors to complement our in-house distribution team. In summary, we are well-positioned to serve our nearly 20 million workplace customers both to and through retirement. In a fast-growing market that plays to our enterprise strengths. Our performance and momentum this quarter and throughout the year reinforce our confidence in delivering on our full-year targets and advancing our long-term strategy. With that, I will turn it over to Mike to walk through the financials in more detail. Mike? Michael Robert Katz: Thank you, Heather. We delivered another quarter of strong results, building on our successes throughout this year. We generated adjusted operating earnings of $2.45 per share, a nearly 30% increase year over year. This was driven by earnings growth across all business segments and highlights the continued progress we are making on our near-term strategic priorities. Earnings growth also drove excess capital generation of over $200 million in the quarter. Items reducing net income were primarily non-cash and largely related to business exited. Turning to Retirement. We generated $261 million in adjusted operating earnings. This is a 24% increase year over year and a 20% increase on a trailing twelve-month basis. Notably, we are ahead of the expected revenue and earnings contribution from One America. Margins remain above our long-term targets given continued commercial momentum driving higher fee income, strong spread income supported by active management of our general account, and prudent management of our spend. Turning to net flows. In addition to the $60 billion of assets acquired from One America, we have generated approximately $30 billion of organic defined contribution net inflows year to date. Third-quarter outflows primarily reflected one large record-keeping plan, which we signaled last quarter. Full-service outflows were impacted by the anticipated lapses from One America and the effect of strong equity markets. Importantly, surrender rates were in line with our expectations and are consistent with the prior year. Looking ahead to 2026, we expect margins to return to the midpoint of our 35% to 39% target range. This is intentional as we increase our strategic investments in wealth management, which we expect will power long-term profitable growth. As Heather mentioned, our targeted investments in wealth management have supported a 20% increase in sales year over year. Investments next year will help further scale the business by adding talented advisors, expanding our product line, and enhancing our technology capabilities. Turning to investment management. We continue to deliver strong investment performance and drive robust flows across an increasingly diversified platform. We generated $62 million in adjusted operating earnings in the quarter. This is a 13% increase year over year and a 15% increase on a trailing twelve-month basis. Organic growth at attractive margins and disciplined expense management drove the result. We generated nearly $4 billion in net flows, bringing year-to-date net flows to over $13 billion. This represents organic growth of over 4%, well above our long-term target of 2%. Our successes are broad-based, with positive retail and institutional flows both in the U.S. and internationally. Within institutional, several large insurance mandates drove positive flows in the quarter. We now serve over 80 insurance clients and manage approximately $100 billion in assets in the insurance channel. And our capabilities in core fixed income, multi-sector, investment-grade credit remain in high demand. Within retail, we generated $300 million of positive flows, resulting in year-to-date net inflows of over $3 billion. Looking ahead, we remain laser-focused on delivering long-term value for our clients through excellent investment performance. Turning to employee benefits. We generated $47 million in adjusted operating earnings in the quarter. This was primarily driven by favorable Group Life claims and prudent management of spend. In stop loss, a reinsurance recoverable drove the favorable result as we maintain reserve levels across all cohorts. As a reminder, the fourth quarter will bring significant credibility to our claims experience. We expect the credibility of our January 2025 cohort to double in the fourth quarter from approximately one-third complete to two-thirds complete. That experience will better inform ultimate loss ratios. In addition to our prudent approach to setting reserves, we are actively pricing and underwriting January 2026 business. Our strategy for that business is unchanged. We are prioritizing margin improvement over in-force premium growth. In Group Life, experience was favorable, driven by better-than-expected frequency of claims. Involuntary paid claims experience was as expected. The loss ratio includes IBNR, in anticipation of higher seasonal claims in the fourth quarter, as planned. Finally, we are on plan and ready to deliver our end-to-end lead management capability on January 1. Looking ahead, we will continue to achieve margin improvement while delivering strong value to our customers. Turning to slide 12. The third quarter marked another quarter of consistent cash flow generation, where we generated over $200 million of excess capital and our return on equity improved to 18%. Year-to-date capital generation is now approximately $600 million, and we are well-positioned to exceed our $700 million goal. We returned approximately $150 million of capital in the third quarter across share repurchases and dividends. This includes $100 million of share repurchases, and we expect to repurchase another $100 million in the fourth quarter. We ended the third quarter with a healthy balance sheet, approximately $350 million of excess capital. Notably, the fourth quarter will also include higher dividends as we raise dividends per share by over 4%. This builds on our track record of growing our dividend each year as we remain confident in the sustainability of our excess capital generation. Turning to slide 13. Year to date, our approach to capital allocation has been well-balanced between investments in the business, returning capital to shareholders, and building up our excess capital position. Our healthy balance sheet positions us well for capital deployment in 2026, where we will continue to prioritize as follows. First, we will continue investing in our business in order to drive long-term profitable growth. Wealth management stands out as another area where we see a clear strategic advantage to expand our capabilities. Second, we will be opportunistic with strategic M&A, such as retirement roll-ups. The bar is higher given how attractive share repurchases are at our current valuation. Finally, we expect to return between $100 million and $150 million in quarterly dividends and share repurchases throughout 2026, subject to market conditions. Importantly, the use of capital will be disciplined and evaluated relative to our weighted average cost of capital. Opportunities with longer breakeven or more execution risk will be assessed with a higher bar. Our 2025 results established a disciplined framework for how we deploy capital. We will carry that same approach into 2026, focused on driving long-term value for our stakeholders. I'll now turn it back to Heather before taking your questions. Heather Hamilton Lavallee: Thanks, Mike. Turning to slide 14. This quarter, we continued to make progress delivering solid results across all of our business segments. Our near-term priorities remain consistent. Driving strong profitable growth in Retirement and Investment Management, successfully integrating One America to drive higher earnings, and continuing to improve margins in Employee Benefits. Looking ahead, we have commercial momentum, financial strength, and strategic focus to drive long-term profitable growth. Thank you to the Voya team for your dedication and hard work in supporting our strategy and delivering for our customers. With that, I'll turn it over to the operator so we can take your questions. Operator: Thank you. We will now be conducting a question and answer session. Our first question comes from Elyse Beth Greenspan with Wells Fargo. Please proceed. Elyse Beth Greenspan: Hi, thanks. Good morning. My first question, I was hoping just to get some color on the size of the wealth management investment that you're pegging for 2026? Michael Robert Katz: Elyse, it's Mike. So as we look into next year, what we're expecting to use is up to $75 million of our excess capital on wealth management. I would think roughly two-thirds of that from a GAAP perspective. We are making some investments in technology, so we'll be capitalizing some of those investments. And those will amortize in over time. Now, I would expect this to be a little more back-half weighted because a large part of those investments is in adding advisors, who we expect over time to drive additional revenue. And what's important about that is that it really shortens up the breakeven of these investments. We really like the return profile of wealth management and not only from a return perspective but also what it does for our customers. Finally, I'd say, Elyse, is we do this from a position of strength. We're ahead of plan this year. We've been disciplined with our spend. And this really gives us an opportunity to lean into an area of strategic advantage for Voya. Heather Hamilton Lavallee: And Elyse, it's Heather. Maybe two other points I would add to it is to be very specific, our wealth management strategy is organic. We're not looking to do any type of roll-ups in the wealth management space, just given the high cost of inorganic options. We think, as Mike mentioned, we've got a really clear path to be able to execute against that strategy. Elyse Beth Greenspan: Thanks. And then my second question is just on stop loss going in right to, I guess, 2026. Would you expect, just given pricing, etcetera, for would you expect that cohort to be back at target margins? Michael Robert Katz: Elyse, let me just step back on stop loss and I'll answer your question around just how we see 2026. So first I'll mention that the reserve levels are firming up for the 2024 cohorts. That's especially true January 2024, which we view as very close to complete. For the January 2025 cohort, we are now beginning to leverage claims experience to help inform reserve levels. This is different than the first and second quarter when we were really fully relying on the pricing and the risk selection to inform that 87% pick. With respect to what we're seeing in the claims experience, very consistent themes to last year. Respect to higher frequency related to cancer and younger ages, we continue to see that. Higher severity with cell and gene therapy drugs, continue to see those elements as key drivers of claims. Now, I would note, and this affects kind of your question, that we are actively leveraging the experience this year to inform underwriting in 2026. It's still very early in the claim cycle. I mentioned that in my remarks. Claims experience is consistent with our reserve levels. And again, the fourth quarter is really important as our credibility doubles heading into next year. And like the industry is seeing, we are continuing to see healthcare costs change at a rapid pace. That we also give you sensitivities to current reserve levels for the January 2025 cohort. A 1% change in loss ratio is approximately $12 million. So, Elyse, as we get deeper into the year, fourth quarter, we'll have a better sense of where we think things are for January 2026. But importantly, while the healthcare backdrop is not different this year, perhaps even more challenged, what is different is the actions we have taken on pricing, the actions we've taken on risk selection, and how we are reserving for this product line throughout 2025 and should expect the same in the foreseeable future. Operator: Our next question is from Joel Hurwitz with Dowling and Partners. Please proceed. Joel Hurwitz: Hey, good morning. Want to follow-up on stop loss there, Mike. Any way you could quantify how much reserves are left on the 2024 block? And then in terms of the January 2025 block, any way you could actually quantify the incurred claims experience through the first nine months relative to where the January 2024 block was running at the same period of time? Michael Robert Katz: Hey, Joel. Yeah. And just like I was saying, we're pretty close to complete in January 2024. Possible, obviously, that claims can be reported late in the cycle. So we'll be patient around that. With respect to just how we're seeing experience in 2025 to 2024, we are seeing modestly better claims experience in January '25 versus where we were in January 2024 through October. But I would just be incredibly clear that we really need to see the fourth quarter. We've only got about a third of the experience coming in at this point. And so, while we are encouraged by that, we really want to see the next third of that experience come in. Frankly, we'll want to see the first quarter as well to get a sense of where this is ultimately going to land. Joel Hurwitz: Alright. Got you. That's helpful. And then back to wealth management, I appreciate the color on the expected investment spend and the '26 retirement margin outlook. But I guess any more color you can provide on the expected revenue contributions from that business and how you're projecting that to emerge over time? Heather Hamilton Lavallee: Joel, it's Heather. Let me start and then I'll toss it to Jay. We think that '26 is going to be a bit more of a build, as we're hiring the advisers and in technology. And I would expect, think about the revenue emerging, growing in '27 and beyond. Again, we're going to come back and give more specifics as we look into '26. But let me turn it to Jay to talk a little bit more, give you a little more color about exactly what we're doing in wealth management. Jay Stuart Kaduson: It's great, Joel. Thanks for the question. Just as a step back, if you think about our wealth management business today, it's focused on the workplace, much aligned to our workplace strategy. Where we're serving close to 20 million customers today. But we're scaling from a strong foundation, as you heard in some of the earlier comments. We currently have 500 advisors. Most of those advisors, Joel, are focused on the strong tax-exempt business we have. We see an additional opportunity to serve our growing large corporate customers. The demand right now that we're seeing with financial planning advice in the workplace is outpacing supply. So we see that our approach is very much complementary to the advice that our intermediaries are providing today. There is a gap in between the supply and the demand. And so the focus for us, we are working on a customer digital self-service platform and the needs to support our growing segment of customers that are looking to self-direct. And we're partnering with Matt's investment management business to deliver a comprehensive suite of retail products. But over the last nine months, you've seen I've recruited a really highly experienced leadership team. And right now they're modernizing the operating environment to ensure that we're built for scale. Heather mentioned the Wealth Management Hub in Boston. We're finding a lot of talent-rich wealth management resources in that area, and we're recruiting advisors specifically given our leading position as a workplace provider of retirement and employee benefits solutions. But Heather mentioned in the opening remarks, we're already seeing 20% growth year over year in sales. Our retail AUM numbers at $35 billion are up from $31 billion last year. But we're going to remain focused on accelerating growth in this wealth management business. There is tight alignment with Amy's retirement business, Andrew's employee business, and working with Matt and Voya Investment Management. More to come on where we're seeing growth in terms of specific numbers for next year. But really happy with the development so far. Joel Hurwitz: Got it. Thank you. Operator: Our next question is from Ryan Joel Krueger with KBW. Please proceed. Ryan Joel Krueger: Hey, thanks. Good morning. Can you give some more color on the higher corporate expenses in both the third quarter and the fourth quarter? I know you cited performance-related compensation for the fourth quarter. But I guess I was a bit surprised by the magnitude of that the size of your company. So love and I guess just related to that, is the prior run rate corporate loss that you had talked about still a good expectation beyond this year? And is this really more of a one-time impact? Michael Robert Katz: Ryan, it's Mike. So maybe first I would say that we are having a strong year. You can see that in the results in the first, second, and third quarter. And frankly, is the key driver when you look at third to fourth quarter. We are expecting that incentive compensation accruals will be higher in the fourth quarter due to that strong performance. The only other pieces I would call out is that in the second half of this year, you're seeing a little bit more interest expense related to the PCAPS. And I think, Ryan, pretty familiar with preferred stock dividends that go up and down each quarter. So beyond that, nothing different to call out from corporate. Obviously, next year we'll reset targets and we'll get back to a normal run rate on corporate and we'll see how the performance plays out. Ryan Joel Krueger: Okay. Thanks. And then on inorganic, are you mostly interested in things that would be similar in nature to the One America deal? Or is I guess, is your interest broader and would span across all of your businesses potentially? Heather Hamilton Lavallee: Ryan, it's Heather. Thanks. I'll take your question. Yeah. For inorganic, we're really targeting additional roll-up retirement opportunities. We think that One America has turned out very, very well, highly accretive for us. And as you heard us talk about in our comments, exceeding the revenue and earnings expectations for the year. So we are most attracted to additional retirement roll-ups that we can integrate. It also links very nicely to the wealth management opportunity that Jay talked about, as we continue to grow our participant base in AUM and retirement, it creates a larger base of customers from which we can expand wealth management. And we are also looking for retirement books to potentially have a general account or more full-service profile that also allow us to leverage the complementary nature of our business, where if we can grow with general account assets, it allows us to leverage Matt's investment management capabilities. And so just really takes advantage of the complementary nature of our businesses. Operator: Our next question is from Thomas George Gallagher with Evercore ISI. Please proceed. Thomas George Gallagher: Good morning. Couple of questions on the wealth business. So for the additional spend in 2026, is the hiring there I heard the comment about hiring advisors. Is that advisors to support your DC plans? More like customer service orientation? Or are we talking about hiring advisors to capture rollovers? So is this like a servicing question or does it capture of rollovers? How should we think about that? That's my first question. Jay Stuart Kaduson: Sure, Tom. Thanks for the question. I think the way you should think about this is both our retirement and our employee benefits business, the plan sponsors and employers today they see a gap in terms of the financial advice that their employees and participants are getting to be able to save for retirement, whether it be their financial or health-related needs. And so there's a gap right now and we have been in active conversations with those plan sponsors and those employers. And so you should think about this in two ways. One, we're going to bring field-based advisors to the workplace. Going to provide financial advice, seminars. Those seminars are going to produce interest from our active participants and employees. And from there, our segmentation strategy continues. There's going to be a portion of our customer base who doesn't have a sophisticated financial plan that's going to result in a need to talk to a face-to-face advisor, our sales desk is going to be there to support them, credentialed, licensed, team-based advisors. We're also building a digital self-service engine where there's a segment of our customer base that wants to self-direct. Self-direct brokerage, move cash. So you should think about this in terms of proactively covering our customer base, and reactively covering the calls that are going to be generated from our continued advancement in our product suite and our distribution breadth. Again, very complementary to the intermediary relationships that are in market today providing that support. There's just a big gap. More to come as we build, but you should think about this very much in heavy recruiting. We're not going out and buying teams of advisors. We're having and finding a lot of success organically recruiting advisors in the field. And refining a tremendous amount of success in Boston in recruiting a sales desk. Heather Hamilton Lavallee: Yes. And Tom, maybe just to explicitly answer your questions, we do see rollovers as an important opportunity for this strategy. We've talked about today within our tax-exempt business where we have close to 500 advisors. We have a very successful rollover recapture rate in that business of between 15-20%. So really, build out is to be able to serve the broader clients across both retirement and employee benefits. But we do see improvements in rollover as a key metric. Thomas George Gallagher: Thanks for that. And then just a follow-up. The shock lapses from One America, saw the guide for Q4. How do you think about that heading into 2026? Are we going to see some continued spillover, maybe somewhat higher surrender activity? Or how do you see that trending? Michael Robert Katz: Yes, sure. Again, appreciate the question. One America right now it's delivering a higher revenue and earnings, and it's contributing overall to our cash generation. The integration you think about for One America will be complete in 2026. To answer your direct question, One America today our flows reflect anticipated lapses from the One America book, as well as we're seeing strong equity markets and that tends to lead to an increase in account values, which then leads to elevated surrenders. Importantly, if you think about the total DC book, full service and overall retention really sits into the 90s. High 90s for full service and in the 90s for the overall book. So the activity remains constructive for the remainder of the year. And just getting back to One America really reflecting in line what our anticipated lapses would be through the integration. Operator: Our next question is from Suneet Kamath with Jefferies. Please proceed. Suneet Kamath: Great. Thanks. To start on the capital return in the $100 million to $150 million guide per quarter for 2026. Should we view that as sort of '26 standalone and then we kind of bump up in 2027 as you don't have the wealth management investment anymore and then you don't have the One America 160 payment? Or are you signaling that this is more of a run rate that we should expect going forward? Michael Robert Katz: Hey, Suneet, it's Mike. No, we're not trying to signal that's a run rate beyond 2026. This is really how we're thinking about 2026. And it's considering a handful of things. Like we come out of the third quarter with $350 million of excess capital. As a reminder, do have an earn-out on One America and we enter the fourth quarter well-positioned to handle that in the middle of next year. As Heather talked about, we have an opportunity now where we are with the integration with One America to kind of lift our heads up and say, hey, are there other roll-ups out there that meet our return thresholds? But we have flexibility. We're guiding to consistent and measured share repurchases this year. We think that's the right outcome. And when we look at 2025, we see that as a great example of when we're using excess capital in a balanced way, it enhances shareholder returns. We see the same opportunity in 2026. We just talked about wealth management. You should expect us to be very disciplined in how we approach that. Investments must meet our return thresholds. And frankly, have a higher bar based on where we're trading right now. Heather Hamilton Lavallee: And Suneet, maybe two points I would add to Mike's comments is, we think we've got a very clear enterprise growth strategy that's going to allow us to drive profitable long-term growth across our businesses in the coming years as well as ongoing growth in cash generation, which gives us flexibility in terms of how we think deploying it. But we do believe it's important to be able to provide consistency to shareholders in terms of what to expect for 2026. Suneet Kamath: Okay. Got it. And my second question, I guess, maybe more of an observation than a question. But when I hear you talk about a wealth management strategy built around seminars at companies, it takes me back to one of your competitors a couple of years ago that talked about this from a financial wellness perspective and spent like half an Investor Day on it. And they don't really talk about it anymore. It didn't really turn into much of anything. So I guess it's important that we get metrics at some point and I'm sure you'll give them to us, but just wanted to highlight this that you kind of show the progress that you're making against this, especially if the spend is $75 million a year and potentially higher going forward. So just wanted to put that out there. Heather Hamilton Lavallee: Yes, Suneet, thank you. We appreciate the feedback. And that certainly is our intention is we want to be able to provide clear progress on how we're measuring success. That's why we wanted to point to some of the revenue growth we're seeing year over year just in terms of the sales. But we hear you loud and clear, and I think maybe what's different for us is this is from an established base. When we talk about the $35 billion of assets under management today, it's contributing roughly 10% of our retirement revenues. And growing. And so again, hear you loud and clear and you can certainly expect to see some proof points from us. Suneet Kamath: Thanks and good luck. Operator: Our next question is from Alex Scott with Barclays. Please proceed. Alex Scott: Hey, I wanted to follow-up on some of the investments. I know you're talking about some of the wealth advisors you're bringing on, but I think you also mentioned that there's some investment in technology. I just wanted to understand how we should think about the impact of these things on the operating margin in retirement business or elsewhere if it goes in other segments? Heather Hamilton Lavallee: Yes. Let me let Alex I'll let Mike take the impact on operating margin, and Jay can talk a little more explicitly about the investments. Michael Robert Katz: Yeah, Alex. We're given a sense right now and I just would emphasize that we see this as an opportunity where we're doing that from a position of strength. Given the results not only just in retirement, but across the board at Voya. We did mention that we expect this to be approximately 200 basis point implication on margins next year. However, we're right in the middle of our budget season and so be more precise with that as we get into next year. But that's high-level thinking and very consistent with what I shared earlier. In the Q and A with respect to how much we expect to deploy both from a capital perspective, but also from a GAAP perspective. Jay Stuart Kaduson: Sure Alex, maybe just as a follow-up on the strategic nature of where those investments are going. We've upgraded our advisor platform, our wealth which we've rolled out in October. And that's really to help our advisors really help them from the perspective of account openings all the way through the financial planning tools that they're using. It's really helping to modernize that environment to connect to more customers and do it in an automated basis. Secondly, reference to digital self-service, we've got a growing portion of our customer base that wants to self-direct. And so we're going to meet that growing need, with wealth transfers going. There's a segment of our population, our customer base that's going to inherit a tremendous amount of wealth over the next decade. And we want to be positioned to ensure that they can direct and have a financial planning environment that works for them. So these tools are going to be helpful as we grow into that customer base as well, but very targeted. Alex Scott: Got it. And maybe if I could pivot over to employee benefits. Could you talk about top-line implications from just the lead management rollout and maybe anything on Benefitfocus? I think just around open enrollment period be interested if that's going to have any influence on top line? Jay Stuart Kaduson: Sure. Maybe I'll start on leave for your first question. So appreciate the question. We're on plan right now to deliver the Leaf technology as well as a fit-for-purpose operating model supporting a January 2026 launch. What we're developing right now is a full-service lead product suite. It's going to help build a moat around our other employee benefits business. As you think about this today, this is a critically important capability in the market and it's leading to a ton of growth. In last quarter, Q3, over 50% of all of our RFPs that came in were requiring a lead management bundled solution. So we're really encouraged with the commercial momentum. In fact, one of the key metrics that we look is getting on the panels of our brokers and we've been successful in getting on most of our broker panels and it's led to sales that have already occurred for January 2026. So today, if you think in terms of where we are in leave, happy with where the build is on the technology side, our operating model is in place and we're getting commercial momentum in terms of our sales. Maybe on Benefitfocus, you know, we like the strategic capability of Benefitfocus. I mean, it fits really well into the broader employee benefits business. Specifically, as we deliver on our capability roadmap, Andrew and team are driving efficiencies and are focused on margin expansion while they do that. Two areas of growth you should think about for Benefitfocus. One is in ICRA. The health plan business side of Benefitfocus is going to benefit from some of the healthcare legislative environment that's changing. Particularly around ICRA. We've got a plan to go after that market. We're set up well and in '26 we should be executing against that. We also see direct synergies with our benefits administration business. So if you think about that tied to wealth management, we've got a growing customer demand for retail financial advice and this is going to be another area synergy for our wealth management business. So, ICRA and wealth management on the top line with efficiencies that we've building over the course of the last couple of years in Benefitfocus. Operator: Our next question is from Wesley Collin Carmichael with Autonomous Research. Please proceed. Wesley Collin Carmichael: Hey, good morning. Thank you. Question on investment management and just looking at institutional, I think flows pretty strong in the quarter and maybe a little bit of elevation on the outflow side, but just hoping you could unpack what you saw in the quarter and maybe any help on the outlook for flows going forward would be. Matthew Toms: Yeah, Wes, this is Matt. Thanks for the question. Overarching, we like the breadth of flows we've seen across channels and products for the year. The year-to-date flows, as Mike referenced, $13.4 billion, roughly 4% organic growth rate. Within institutional, $9.7 billion of that on the year and that's driven by the insurance business, CLOs, public and private fixed income doing well, also private equity secondaries. We like the breadth within institutional year to date 3.7% in retail. And again, incoming growth franchise and multi-asset in the U.S. So we like the breadth. Within the quarter specifically and more to your direct question, the $3.9 billion number in the third quarter, very happy with it, another strong quarter. In institutional, the majority of that $3.6 billion driven by a few large insurance wins. It's a bit more concentrated in the quarter, I think important to hear that within the construct of the broader year flows. You're right, it's a good call out. The higher level of activity in institutional you see in the supplement. We're very happy with the $3.6 billion net. You've got more wins and you've had some more outflows. Some of those outflows are tied to natural maturities in our CLO business. Bank loan mandates, as well as end of life in private funds. And there's also some rotation in international equities out of one style into another. So you do see that higher amount of in and out, but again, the net very happy with the $3.6 billion on the quarter. And then looking forward, in the fourth quarter, we expect flows to be more muted than the strong third quarter after some strong realizations in the third quarter. Longer term, we see no reason to pivot away from that 2% plus longer-term organic growth rate assumption and that we like the commercial momentum we have in the business. And I view it as a testament to the strong investment performance that we've called out 74% outperformance Republic Strategy over five and a really strong 84 over 10. Delivering for our clients and growth is the outcome of that. Operator: Our next question is from Wilma Jackson Burdis with Raymond James. Please proceed. Wilma Jackson Burdis: Hey, good morning. Could you quantify Voya's floating rate exposure? I know that's something that could impact earnings a little bit in 4Q with the rate cuts. If you could just help us with that. Thanks. Michael Robert Katz: Hi, Wilma. It's Mike. So just when we think about floaters, little less than $1 billion of floaters. That's embedded in the overall sensitivity that we share in the investor presentation. So maybe a modest impact we would expect from the effect of the short end coming down. We do when we do think about our sensitivities, would call out that the net effect for Voya is smaller to a shock down in the yield curve. As we have offsets in the investment management business related to fixed income asset levels. And I'd also say like, sensitivity has went up a little bit this year. Talked about that. In Q1 with the acquisition of One America, but the team is doing a nice job of actively managing the general account. And I think that's helped us kind of stabilize what is kind of the raw effect of what's happening with rates. Wilma Jackson Burdis: Okay. Thank you. And then do you expect any additional reinsurance recoverable on stop loss to flow through over the coming quarters? And maybe just talk about the likelihood and timing of that. Thanks. Michael Robert Katz: Hey, Wilma, it's Mike again. Yes, so this is a bit of an idiosyncratic quarter with respect to us calling that out. It's a natural part of the stop loss business. We've talked about the fact that from a deductible perspective, we usually kick in, in the $200,000 to $300,000 range. We'll cover our clients and then we have excess loss reinsurance above $5 million and that's where we saw a kick in from our reinsurer that really was the only effect in the quarter. And so I wouldn't expect that if you're looking at necessarily forward-looking expectations on loss ratios. If there's something significant in a quarter, we're going to call it out, but I wouldn't use that as anything that would be sustainable per se in the outlook for stop loss. Operator: Our next question is from Kenneth Lee with RBC Capital Markets. Please proceed. Kenneth Lee: Hey, good morning and thanks for taking my question. Just one for me. Within the general account portfolio, wonder if you could just remind us again what's within the private credit allocation sleeve there? Thanks. Matthew Toms: Hi Ken. Yes, it's Matt. Let me unpack that a little bit for you. So overall portfolio continues to be very high quality and we continue to include a slide in the deck, it's Page 27, breaking down the quality of the portfolio. Importantly, 96% of the general account is investment grade. And private credit has 23% of that. Of course, a heavy bias towards investment grade as well. That's 94%. We provided a footnote on that page to give you some further detail there. So NAIC ones in twos, 94% of the portfolio. Think about those as driving that 50 to a one basis point yield advantage versus public over a long period of time with roughly double recoveries, and driven by stronger covenants should there be any credit issues. I mean, overall, I think the credit markets are performing quite well. You can see, credit markets are near all-time tights. The term private credit has gotten a lot of attention as you referenced but that covers a broad array and our portfolio is heavily focused on the investment-grade lending area. And this area is of course not new to the insurance industry, not new to us and one that has generated very attractive yields. With less downside risk over multiple decades. And so very different than of the headline news you'll see around bank lending, syndicated loans or middle market lending, it's a different market segment. And we feel very well positioned with how the portfolio is performing. Kenneth Lee: Great. That's all I had. Thank you very much. Operator: Our final question is from John Bakewell Barnidge with Piper Sandler. Please proceed. John Bakewell Barnidge: Good morning. Thank you for the opportunity. And my first question could you talk about the Edward Jones partnership that was mentioned earlier this year, success so far? In plans for ahead. Thank you. Heather Hamilton Lavallee: Yeah. We'll have Jay take that, and it continues to be, you know, one of the other important attributes of One America, which as we've talked about, John, has been just a great, a great integration and opportunity for us to generate value. But Jay? Jay Stuart Kaduson: Great. Appreciate the question, John. If you think about that OneAmerica acquisition, as Heather said, it's not only producing strong earnings and revenue, the distribution relationships that came along with that business it really is a key value-creating lever for our team. So Edward Jones is an example of that. Right now we remain on track for the Edward Jones relationship as we head into 2026. So, specifically, we're working with Edward Jones right now on the migration of the one book of business. Our distribution agreement was executed earlier this year. And we're finalizing key technology connections in order to support the full integration. Our teams from a distribution perspective are actively engaging with each other. On market opportunities. Edward Jones sent a press release out on the partnership a few weeks ago. And their advisors are going to be able to offer our full suite of retirement plan tools and services to their clients starting in early fiscal year 2026. So if you think about where we are, we're on plan with that. Again, one of the positives we see in these opportunities in retirement roll-ups, isn't just the earnings and revenue as associated to the existing book, but it's the new distribution opportunities that we acquire as part of that relationship. And this is a great example of that. John Bakewell Barnidge: Thanks for the answers. My next question can you talk about the BlueOwl partnership plans for product launch and if there are additional alternative asset managers? With which you could partner? Thank you. Heather Hamilton Lavallee: Yeah, John. Maybe just a quick frame before I toss it to both Jay and Matt. But know, we think this BlueOwl partnership is just one of the many examples of where we can really unlock the synergistic opportunities that exist across our businesses, you know, specifically when we think about retirement wealth management and investment management. But Jay? Jay Stuart Kaduson: Sure. Again, thanks for the question, John. Maybe just to continue what Heather was saying. Matt and I, we're going to be leveraging going forward as we think about our growth strategy. This BlueOwl partnership is going to be a key contributor to that growth. Specifically, our teams are trying to access private investments and innovative solutions to drive retirement outcomes. That's going to be in the DC space. So that's the focus right now. The private investments and innovative solutions. Specifically, gonna be in market with private credit, alternative credit, and non-traded REIT CITs by the end of this year. Going to start with our AMA business and we're seeing a ton of interest right now from our RIA firms in different pockets, specifically many of them are waiting for where the DOL will make has happened. And if you know, John, the two areas, the two gates we've got to get through right now, one is on the DOL side on their rulemaking and the second is the Safe Harbor protections that are going to help accelerate the adoption by plan sponsors as the fiduciary. I'm going to turn it over to Matt to give a little bit more color on how his investment management business is partnering with BlueOwl, but right now the partnership is on plan for end-of-year rollout. Matthew Toms: Yes, John, thanks for the question. Just to build on that a bit, we continue within Investor management to work on target date products, built from our leading multi-asset team with long and strong track records that have been driving our model portfolio growth we've seen over recent years. And we believe our capabilities pair very nicely with BlueOwl's capabilities, in their broad array of complementary private strategies. Importantly, as we build these target date products, the focus is on risk-adjusted returns for our clients as well as attractive returns net of fees. And so we build that product out in partnership with BlueOwl. Look for the 2026 timeframe for those to come to market. Still looking for some clarity on the regulatory side. We do think this is an attractive path forward. And just to expand a bit, you mentioned other private components. We're working with BlueOwl. There will be other providers within the structure as well to round out the complete need. We're very excited about Voya and BlueOwl's capabilities. We'll supplement that as needed as we always do multi-manager products with other partners. And beyond the DC space, we're very excited about how this ties our insurance business, where we bring our own capabilities as well as those partners like BlueOwl to our broad institutional customer base. So that's a way to think about the growth as well. Operator: Thank you. We have reached the end of our question and session. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.
