We're live. Welcome back to the Bank of America 2021 U.S. Insurance Conference. The session right now is Voya Financial, with the next one being Everest Re. We'll get to that in a second. Just so you know, on your screens, if you're dialing through Vericast, you can ask questions. I will read the questions, so if you don't have a video camera on your own. We can certainly ask questions, and we're really pleased to have CEO Rod Martin, CFO Mike Smith from Voya Financial here to talk about their company. Rod became CEO 10 years ago, basically, when the thing was carved out of ING all the way back, and Mike came from Lincoln about five years ago and he's been CFO since. They both have a great deal of experience in their respective roles. I think you probably know them if you're on this call. Let's move it to them. Unfortunately, we're having intermittent video with Rod. He's coming in and out. He's certainly there on audio, and we might be lucky enough to see him if that comes through. How are you guys doing today? Doing great, Josh. How are you doing? Good. Okay. There behind the picture, I see Rod, so he's sort of there. I'm here Tell us about COVID a little bit and how Voya and really Voya's employees have adapted to this time and maybe things that have been learnings that have come from it that are going to extend beyond the COVID age. Sure. I'm happy to start. We, like all companies, went home on that Friday in March and found ourselves in a virtual environment. We transitioned very well, and we've been fundamentally 100% remote since mid-March. One of the things that might be interesting to the listeners is, prior to COVID, about 20% of our workforce was something that we call Virtually Orange. Virtually Orange is something we inherited from ING Group. It was a much smaller percentage of our total, but it represented about 20% of our domestic population of 6,000 people. So we had practices, methodologies, and tools in place to accommodate that group, and if you think about our Virtually Orange group as compared to a physical site, it was our second-largest group of population. We've been able to take that learning and those experiences and obviously expand that to the whole firm. Mike and I are spending a lot of time on and around this topic, as you might expect. I do believe that the learnings from the pandemic and the experiences that we're all having have fundamentally changed the operating model prospectively. We do expect, when the science permits, that our workforce composition will look quite different. I think our Virtually Orange population, by way of example, will likely grow to 30% or 35%, perhaps even more. We will be having a hybrid group, and what that means to us is simply they'll be in office part of the time and virtual part of the time. It'll be a natural group that are interested and looking forward to coming back to the workplace, and of course, we'll be welcoming them. It has changed, it has changed not only for our employees, but it has changed for our customers and prospective customers. I've been very impressed with how agile the organization has been to find a way to work through a whole bunch of mediums, but Zoom is a common tool, to both open, manage existing relationships, and close business. We've moved through this rather well. We ended the year with a great deal of momentum, it's been very effective. All right. Taking a real overview here. Voya has a number of businesses, we class them into three segments. There's some businesses within each segment, but depending on how you count them, I think back 10 years ago, there were six or maybe even seven segments, the way you can count them. Do these three segments have a particular natural home together? Is that different from how things were 10 years ago when you came in and since you've been trimming? What's the harmony and what is the business proposition of putting this current composition of Voya under one roof? Sure. I'll start, then Mike and I can toggle back and forth. I think the consistency of what we've chosen to retain is focused on and around the workplace and with institutional clients. Fundamentally, we've exited our retail-facing businesses and our capital-intensive businesses. We've exited, by way of example, our variable annuity business, our fixed annuity business, our retail life insurance business, we just announced on Monday of this week, our retail broker-dealer. We have leaned in and retained our retirement business, which is a market of markets that no doubt will get into our conversation, our asset management business that focuses on institutional clients, our employee benefit business that's got a significant amount of alignment around the workplace and with our retirement platform. That's been the commonality. Mike, do you want to? Yeah, I just said, the only thing I'd add is the retirement business obviously is a significant source of assets under management for the investment management business, right? There's a strong alignment there, and I think people understand that pretty well. Yeah, it's been quite a transformation over the last 10 years. I think now a much more cohesive single story of a focus on institutions and employers and their employees. I did some like sort of looking around, I guess we'll call it, in the group retirement space, and I saw about five competitors that were a bit larger than you, and then another 10 competitors about the same size as you. Then there's lots of competitors that are a lot smaller than you. For a business that does seem to have a natural economies of scale to it seems like there's still a lot of fragmentation. Can we talk about what you see as the long-term sort of distribution of that business among competitors? Is this going to be a mass consolidation? Is there room for a lot of competitors or is there room for a lot of competitors? Will Voya be a consolidator or does this perhaps make sense more for somebody else? Not that it doesn't make sense for you, ultimately, if there's only two or four businesses that will truly be dominant in this space, what can we expect in the long-term future? Sure. I'll begin. If we use the 401 market as an example to answer your question. If you think back 10 years ago when Mike and I began this journey, at that point, about 50% of the assets under management in the 401 space were the top 10 players, and Voya was one of those top 10. Today, 10 years later, that's 75%, and we're about fifth or sixth. There's been a natural movement to the five or six players that the marketplace, the financial institutions, the employers perceive to be long-term, sustainable, committed players to this market. There are 50 other players outside of the top 10, I have no question and no doubt there'll be further consolidation, either in the form of acquisition, the majority of it hasn't been through acquisition. It's really been by the market and the advisory community and the consultant community choosing one of these five or six players. Of course, we measure our market share gain from both the top 10 players and the bottom 50, and we've gained significantly over that period of time from both groups. I think there's more than enough space for the top eight or 10 players in the marketplace. The consultant community does a pretty effective job of diversifying that business. We see ourselves as a very sustainable player and a very committed player to this outcome. Mike? I think the point on overall assets is important, there are some significant sub-segments to really be thinking about as well. For example, we're number 1 in the government space, not everybody wants to play in that place. We think we have advantages there. We have a strong tax-exempt business, that's not an area that others choose to focus. I think the customer base itself is a little more fragmented than would be implied by a world of two to four. I think you can think of it as there's going to be hard to know where it'll end. I think the thesis that we're going to get down to two or four has been around for a long time, and we're still at 50. Over time, I think it's going to shrink. The pace and ultimate destination, I think, is a little unclear. I don't think it's down to just a handful. In terms of, can you go into a little more detail on the different skills, I guess, you bring to bear in tax exempt, think about 403 versus 401 versus 457, why certain markets are a particular match for what Voya does and what they specialize in, versus some of the other markets that some of your competitors may have special skill in? Sure. As you just pointed out, the education market, whether that's the K-12 or higher ed, is unique and has typically a very unique distribution and a group of consultants that serve that market. That's a market, as I suspect you know, that we've been in for a very long period of time, and have been a market leader for a very long period of time. That's different than the for-profit 401 players. There's different competitors and often a different array of consultants, both large and small, that serve that. As Mike just pointed out, we are the market leader in the government space, and that's yet again another one. Part of how we describe our retirement business is a market of markets. There are unique distribution to those markets. We've been in these businesses for decades, and have developed long, consistent, and deep distribution and consultant relationships as well as customer relationships. I mean, the average Retirement customer is with us for 12 to 15 years. We view that as a terrific outcome and a long opportunity to have that relationship and manage those assets. Again, we're a bit of a unique player because we have a at-scale business in a variety of these market segments that we're choosing to play in. Mike? We view them all as reasonably equally attractive, right? We don't have a preference for one over the other. I think if you understand the characteristics, we're eager to grow in all of them. There's no place that we're biased or leaning. I think we'd love to see growth across the board. I have a couple of questions from investors. The first relates to the 2021 EPS guidance. Can you comment on the revised guidance and how we should think about that versus the $1.80-$1.90 in 4Q 2020 exit rate? I guess, well, $1.44 in terms of the normalized number. Right 1.90 in terms of result. Yeah. Right. Let's just go back and maybe for those who aren't as intimately familiar as the questioner. Back at the time we announced the Life transaction, we had guided to an exit rate out of fourth quarter 2021 of EPS in the $1.80-$1.90 range. That was effectively to say, after the Life transaction and giving effect for that we would be basically back on track where we would have expected to be had we kept the Life business. All right? We gave that guidance at that time. We reissued guidance for the fourth quarter of 2021 in yesterday's call, where we said the growth rate over the fourth quarter result of 2020 would be 12%-18% higher, and that's a range of $1.60-$1.70. I think the question is, explain the difference. Why are we down? You've got one particular tailwind between where we thought we'd be and where we are, and that is the equity markets have outperformed where you would have expected, and that is certainly giving a little bit of a boost to the Retirement business. There are several headwinds, I think is the way to think of it. None of them are more significant than the other, but they all add up to an overall headwind. The first thing to talk about is the Life transaction and the timing of that. We would have expected to close the Life transaction in the third quarter. We actually closed it in the third quarter of 2020, I should say. We actually closed it on January 4th of 2021. That's put us behind the original schedule in terms of taking out stranded costs, and it's put us behind in terms of using the proceeds to buy back shares. That's one aspect, that's one headwind. A second is interest rates have certainly underperformed relative to where we thought at the end of 2019 when we originally set the guidance. That's been a bit of a headwind. Also, you've got the impacts of COVID. While we expect most of the claim activity to be behind us by the time we get to the end of this year, there are commercial drags. The growth in deposits, the growth in assets. We've had modestly increased withdrawals in Retirement. You've seen a little bit of a drag in employee benefits than above and beyond what we would have expected. Investment management as well has probably seen a little bit, in many ways, less activity than we would have thought. All of that adds up to a bit of a drag. Finally, compared to where we thought we'd be, we've seen more opportunities to invest in the business, to bring on new clients, to bring on new participants in Retirement. The expense that has come along with that has been a bit higher than we would have anticipated. Last thing is that guidance also includes the impact of the sale of the independent financial planning channel. That's $20 million-$25 million pre-tax per year. Another $4 million or $5 million pre-tax of a drag as well. All of those add up to offset the tailwind of the equity markets. Again, I point out that fourth quarter of 2020 was a significant improvement over fourth quarter of 2019, and I would submit that a growth rate of 12%-18% year-over-year is also a pretty attractive growth rate. We're pretty proud of our ability, despite the fact that the headwinds have been a bit more than we would have expected back in December of 2019. Second question is, can you gauge your level of interest in acquisitions versus share repurchases? Yeah. I'll begin. At the end of 2020, we repurchased about $6.7 billion or $8 billion of shares. Particularly in relation to our market cap, a pretty significant number. We just announced a billion-dollar authorization for 2021, and Mike and I just communicated we will execute that approximately ratably through this year. We believe that demonstrates our confidence in our capital-light, free cash flow businesses and getting back to a level that we were pre-COVID doing. What we've also said is as a result of the de-risking of the portfolio and the exiting of the retail businesses, the variable annuity, the retail annuity, and the life insurance business, we've ended the year with approximately $1.8 billion of capital, some of which will be used to retire debt. The VFA retail broker-dealer transaction is in addition to that. We've got approximately $2 billion of capital. We are and have been willing to invest in our businesses and frankly, add some capabilities to our businesses if they meet the appropriate thresholds compared to share buybacks. That's been the guidance of what we've been given. Mike, feel free to add. No, I'd just emphasize that last point. The intent of approaching this proactively is to begin putting the excess capital to work through share repurchases while we work to see if there are opportunities that would be even better than share repurchases in terms of creating shareholder value. We've outlined some of those areas that we'd be interested in pursuing, bolt-on retirement blocks, adding capabilities for distribution and investment management. An area that was, I think, new to investors in the call yesterday was looking for ways to broaden potentially our capabilities in the workplace to help drive better employee outcomes as they seek to use their benefits and plan their financial futures. We're open to those kind of opportunities as well as we look to become a primary provider in that space. That will be compared to share repurchases. If we find something that is better than share repurchases, that is a potential alternate use of excess capital. We think that's a pretty high bar, and we've been financially disciplined, as Rod alluded to with over six and a half billion of share repurchases since IPO. Nothing has changed in our philosophy. Nothing has changed in the discipline. We're simply giving a little more color and a little broader footprint as to the kinds of properties that we might be interested in looking at. Thank you for that. Can we talk a little about the investment management business? Fixed income performance has been very good. Equity strategy performance has been lagging. The pandemic performance hasn't helped very much. I would also suggest that you have change at the bottom and there's the opportunity for things to get better. Is there anything to triage there, or is it just your strategies are out of favor right now, and like all things, will normalize over time? How do we see the future of the equity strategy in investment management? Mike, do you want to begin? Yeah, I'd be happy to. I think you hit on it. I think first, the strategy, which is well diversified, risk management kind of strategy is probably not the place to be in the markets that we've been in over the last several years. While we've had individual moments of good performance, I think if you look over the long arc of the last several, the performance there has lagged. I should say that the fixed income performance just has been outstanding. We shared some of those characteristics with virtually all of our funds outperforming their benchmarks over the last five and 10 years. We feel very good about where we are on that front. On the equity side, we're certainly staying the course to some extent. As you say, switching at the bottom is probably, although I wouldn't say the bottom, but when you're a little bit off, it's not the right time to make huge changes. With that said, we are looking to bolster our capabilities. We bought a quant equity shop, very small, that we think can provide some additional capabilities to help us with some new strategies that we'll introduce on the equity side. Also, Christine and team are looking at other ways that we can bolster the performance there. I think we feel good about the overall direction of investment management, especially good about our capabilities on the fixed income side and the growth in the insurance channels and other institutional places. Moving to We feel very good about it. We also feel very good, and we talked about this on the earnings call, about the momentum of our unfunded wins notifications going into the year. It actually is at the highest mark we've ever had. Again, this will play out over the Q1, Q2, and Q3. Coming through a COVID year, having the kind of year that investment management had in aggregate, which was terrific, and to carry that momentum in, we feel very good about it. Back to you. Transitioning to group benefits. There's been a lot of consolidation in recent years. That consolidation, I think has both expansion of breadth, more companies offering more products to expand the shelf. Some companies gotten deeper in the lines of business that they're in. We talked a little about the potential for consolidation, organic consolidation or inorganic in the group retirement business. To what extent is this a business that's shaping up for further consolidation, organically or inorganically, overall? I guess I'll have more questions, but let's start there, and we'll continue. Look, I think the industry has seen some amount of consolidation in the group benefit business. Where we play, I think we would define as a very deep but a defined swim lane. We largely play in the 500 lives and above segment and generally much larger than 500 lives. Our product offering, we feel very good about, but we're not trying to be all things for all people. We've got a Stop Loss business, a group life and LTD offering. We insure 100% of our LTD exposure. We have a voluntary benefit business that has been growing very rapidly. In fact, we're now the fourth largest player in that segment. We have not participated, and do not offer vision or dental by way of example. We see extraordinary opportunities to continue to grow in this business, but with a narrower portfolio, and we view that principally as organic growth. Could we add some capabilities? I'm certain we could. Would we be open to it? Sure. It's been fabulous. I mean, the in-force, Mike, I think has grown at about 7% plus a year, over this period of time. It's been our fastest growing and highest ROC, ROE business in our portfolio. Mike, feel free to add. No, that's right. I think to the breadth of portfolio, I think particularly for the markets we play in, and the distributors that we work with, I think our focus on a couple of key areas that we are expert in and are able to deliver is not in any way an impediment to our ability to reach those markets. I think the broader product suites tend to play better when you go down market. Smaller employers will tend to want fewer vendors involved. Larger employers are more looking for a best of breed kind of approach. We're able to meet that need. In our Stop Loss business, we're a top five, kind of a must-quote player. We're rich, deep heritage there. As Rod said, very significant growth in voluntary. We're there in group life. We're not quite as highly ranked as those other two businesses, but it's solid and it's an important part of our offering. We're able to leverage the relationships across distribution by having that broad enough kind of capability. We are able to leverage relationships with employers through a group life to then come back in a couple of years. Often what you'll see is we'll get a group life win, then we'll come back, and we'll get a voluntary product or two onto their platform. That's typically how we go. If I could add just one more point. Yeah, please, Rod. In the voluntary segment, one of the pieces that the industry has observed, and we've observed and experienced is, as people have made increasingly choices to choose larger deductible healthcare plans to better manage their family budget, the need for and the opportunity for voluntary products to help bridge in some of those gaps, has grown. Again, this has been one of our fastest growing product lines. What listeners might find interesting is half of the sales, 50% of the sales that we've been making in this fast-growing line have been new lines of coverage for the companies we're doing business with. This is ranging from companies of 500 lives and above to literally Fortune 50 companies. It's a very interesting segment of the business that a lot of the new business is not replacing someone else's. It's literally adding new coverage in the marketplace because the employer, the employee, and the advisor are seeing the need for that kind of coverage, as a consequence of healthcare and managing the cost of that outcome. Back to you. Yeah. Maybe I'm wrong about this, and you're going to tell me I'm wrong because you know more about than I do, of course. I feel like the Stop Loss business is a conversation with the CFO or the chief risk officer, whereas the voluntary business is more of a human resources issue. Are those two businesses or are they the same business? Is there a natural cross-sell between them? You're not wrong. The Stop Loss business is typically an office of the CFO and CEO decision to manage those costs at an enterprise basis and often a different, particularly in a larger company, a different group of decision-makers. The group life and LTD, we view that, those are necessary platforms, and the voluntary benefit business is the additive piece that increasingly is being recognized as providing solutions to important gaps in the coverage. Even they have different consultants that broadly serve those groups. It's largely there, but Mike, again, you used to run this business and feel free to add. I think that the synergy there is at the distribution level, right? Where you have a sizable relationship with the large consulting firms or the regional firms, that comes from a long-standing relationship with Stop Loss. I would attribute our ability to at least penetrate initially with some of our voluntary offerings was in fact driven by their knowledge of us, the way we do business, and a desire to expand their relationship with us. You have to deliver once we got the opportunity, and we have. I think that's then led to a cascading positive effect that has resulted in the voluntary growth we've seen. You're completely right. At the customer level, there's not a lot of interaction other than the ability to say, "Look, we've had a relationship for years on Stop Loss. We've worked well together. Wouldn't you like to hear what we do? You like working with us." There's probably that kind of thing, but it's not a common occurrence, I would say. Most benefits providers have talked about how persistency has gone up during COVID. I guess competitiveness of being able to get in front of management and making them switch has sort of taken a back seat. I assume that as we get to the tail end of COVID or the tail end of the most serious parts of COVID, there's going to be greater competition. Are you positioned in your mind, is there going to be a big sales push to try and win clients? Should we expect there to be a drop in persistency for the industry as it gets more competitive on the other side of COVID? Fair question. I think the experience that we've had, let me break down the lines of business in our group benefit business. In group life, that business is typically shopped in the market every three, four, or five years. Certainly in a COVID year, that wouldn't have been probably on the highest list of priorities for companies that are facing everything that we all faced in that year. I suspect group life cases, once we more normalize the rhythm, will be back to that kind of cycle. The rest of it, as a result of COVID, both Stop Loss and voluntary, we saw a very normal kind of rhythm and relationship. Again, you see that reflected in the results. We grew that business nicely against the backdrop of COVID, both Stop Loss and as we talked about our voluntary benefit business. Mike, again, jump in. No, I think you covered it well. Well, we are out of time. I have more questions, but I don't have more minutes. That's the story. If I get more questions from investors, I'll forward them on to you. I just want to say thank you, and thank you to your employees, and everybody who's been impacted through this challenging time. We appreciate your time today, and thank you. Thank you so much. Yeah, thank you, Josh. Appreciate it. Bye-bye. Be well, be safe. Bye-bye. You too. Bye-bye.