Voya 2014 Annual Report Download - page 13

380
Basis Points of Improvement
in Ongoing Business Adjusted
Operating ROE 2012–2014
stock. We continue to view share repurchases as an
eective use of our excess capital.
We have three strong businesses
Each of our Ongoing Businesses — Retirement Solutions,
Investment Management and Insurance Solutions —
improved their return on capital in 2014 compared with
2013 and 2012. This was accomplished through focused
execution on more than 30initiatives to make better
use of capital, improve margins and accelerate growth.
Whether through our value-added retirement readiness
oerings in Retirement, broadened product portfo-
lio and distribution in Annuities, strong performance
in Investment Management, rebalanced mix of new
business in Individual Life or our expanding Employee
Benefits business, we are finding and taking advantage
of ways to both improve the value of our businesses
as well as help our 13million customers become retire-
ment ready.
We are eectively managing the
Closed Block Variable Annuity segment
In 2014, we once again supported our primary goal of
protecting regulatory and rating agency capital in the
Closed Block Variable Annuity (CBVA) segment. In addi-
tion, we began an initiative to outsource the actuarial
valuation, modeling and hedging functions for the CBVA
segment to Milliman, Inc. to create a more streamlined
framework and more variable cost structure for this run-
o block. At the same time, Voya Financial is retaining
full accountability for assumptions and methodologies,
as well as the setting of hedge objectives and execution
of hedge positions. In 2014, we also provided customers
with increased flexibility and income by oering certain
policyholders the option to receive additional guaran-
teed income and to annuitize their contracts prior to the
end of the 10-year waiting period. We saw encouraging
results as roughly 13% of the account value eligible
for the oer elected to participate. This was a unique
approach to reducing the size of the CBVA segment —
one that was good for our customers, our shareholders
and Voya Financial.
For Voya Financial, 2014 represented another important
milestone in the transformational journey that we began
in 2011 when we set out to dramatically improve our
business and become a standalone, independent com-
pany. Voya Financial’s 2014 Ongoing Business Adjusted
Operating Return on Equity (Adjusted ROE)2 reached
12.1%, up 180basis points from 2013, and up 380basis
points from 2012. This achievement is particularly note-
worthy in that we reached our previously established
2016 Adjusted ROE target of 12% to 13% two full years
ahead of our plan. In addition to significantly improving
our financial profile and profitably growing our Ongoing
Business, we have transformed our culture, enhanced
our product portfolio, driven greater value for our cus-
tomers and shareholders and introduced new ways of
meeting our clients’ needs.
Perhaps most important, we have taken decisive
steps toward achieving our vision to be America’s
Retirement Company. There are many examples
of this progress, including our launch of new digital
tools like myOrangeMoney™, our strong financial
performance and our rebranding, to name a few. The
following should give you a sense of the tremendous
transformation that we have achieved and the progress
that we have made.
We have a strong financial profile and
we are generating excess capital
We concluded 2014 with an estimated combined
risk-based capital ratio of 538% — above our target of
425% — and a debt-to-capital ratio3 of 21.3% — better
than our target of 25%. As a sign of our improved
financial strength, Moody’s Investors Service, A.M. Best,
Standard & Poor’s and Fitch Ratings all revised their
outlook on our ratings from stable to positive during
2014. And during the first quarter of 2015, Standard
& Poor’s, Moody’s and Fitch all raised their ratings on
Voya Financial and its insurance subsidiaries. In 2014,
we also increased our expectation for excess capital
generation and, through early March 2015, had utilized
$1.4billion of excess capital to repurchase our common
2 Ongoing Business Adjusted Operating Return on Equity is a non-GAAP financial measure. For more information, see “Non-GAAP Measures.”
3 Estimated combined risk-based capital ratio primarily for Voya Financial’s four principal U.S. insurance subsidiaries.
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