Voya Financial (VOYA) Sees EPS Growth of at Least 10% Through 2021; to Boosts Dividend

November 13, 2018 12:42 PM EST

Voya Financial, Inc. (NYSE: VOYA), announced today its plans to achieve an adjusted operating earnings per share (EPS) annual growth rate of at least 10% (on a normalized basis) through 2021. The company expects to achieve its plan through a combination of organic business growth, cost savings and share repurchases. Senior management will discuss further details about Voya’s growth strategy at the company’s 2018 investor day meeting beginning at approximately 1 p.m. ET today.

“With our competitive advantages and renewed focus on our chosen businesses, Voya Financial is poised to achieve significant earnings per share growth of at least 10% annually over the next three years,” said Rodney O. Martin, Jr., chairman and chief executive officer of Voya Financial, Inc. “Importantly, we believe that we can generate this level of adjusted operating EPS improvement while also achieving an operating return on equity of between 13% and 15%.”

Organic Growth

“The foundation of our plans starts with our higher-growth, higher-return, capital-light Retirement, Investment Management and Employee Benefits businesses. With our established positions in the workplace and with institutions, we will continue to expand our offerings to existing clients, while also attracting new customers. In addition to executing on growth plans that are specific to each business, we will continue to leverage opportunities to deliver holistic, comprehensive solutions across our businesses. With our significant reach and strong brand awareness, we are well positioned to help our customers achieve their goals with confidence,” Martin added.

On a normalized basis, Voya expects its Retirement business to grow earnings by 4% to 7%; Investment Management to grow earnings by 5% to 8%; and Employee Benefits to grow earnings between 7% and 10%, in each case annually through 2021. Voya will also continue to benefit from earnings in its Individual Life segment, which Voya recently announced will cease new business sales effective Dec. 31, 2018.

“Voya has a favorable profile and diverse businesses that are expected to generate high-quality and sustainable earnings as well as significant free cash flow. Specifically, we expect total free cash flow conversion of 85% to 95%, which includes the benefit of improved free cash flow from our Individual Life segment,” said Martin.

Cost Savings

“Over the past several years, we have demonstrated our ability to execute and become more efficient as we’ve narrowed our focus and simplified our company. We have also leveraged our Continuous Improvement program to achieve efficiencies and advance operational excellence. At the same time, we have invested in our company, ensuring that we are well positioned to grow.

“Based on our track record, we believe that we can achieve an additional $100 million of cost savings by the end of 2020 — this is in addition to our previously shared target of $110 to $130 million of cost savings by the middle of 2019 and the $20 million of expected savings from our recent decision to cease sales of individual life insurance,” added Martin.

Capital Deployment

“We will continue to be good stewards of shareholder capital and build upon the nearly $5 billion in excess capital that we have returned to shareholders via stock buybacks. With an expected strong free cash flow that will support excess capital generation, our capital deployment plans will continue to emphasize share repurchases.

“In addition to share repurchases, we also intend to increase our common stock dividend to a dividend yield of at least 1% by mid-2019. The board of directors will determine the appropriate level of dividend as we continue to execute on share repurchases at these attractive valuation levels. As we advance our plans next year and beyond, we may further grow the dividend to deliver even greater shareholder value as well as attract new investors seeking a higher-yielding dividend,” said Martin.

“We are excited about our plans and are committed to building upon our financial, operational and cultural improvements over the past few years as we focus on achieving our vision to be America’s Retirement Company,” concluded Martin.

Webcast and Slide Presentation

Voya Financial will host an audio and video webcast of its 2018 investor day beginning at approximately 1 p.m. ET today. The webcast, which will include a slide presentation, will be available live via the internet and can be accessed at Participants should join the webcast at least 15 minutes prior to the start of the event to download and install any necessary software. A replay of the webcast will be available at starting at approximately 10 a.m. ET on Wednesday, Nov. 14, 2018.

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