Voya Financial Inc.
08/07/2025 | Press release | Distributed by Public on 08/07/2025 14:11
Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the purposes of this discussion, the terms "Voya," "the Company," "we," "our," and "us" refer to Voya Financial, Inc. and its subsidiaries.
The following discussion and analysis presents a review of our consolidated results of operations for the three and six months ended June 30, 2025 and 2024 and financial condition as of June 30, 2025 and December 31, 2024. This item should be read in its entirety and in conjunction with the Condensed Consolidated Financial Statements and related notes contained in Part I, Item 1. of this Quarterly Report on Form 10-Q, as well as Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") section contained in our Annual Report on Form 10-K.
In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Actual results may differ materially from those discussed in the forward-looking statements as a result of various factors. See the Note Concerning Forward-Looking Statements.
Overview
We are a leading provider of workplace benefits and savings solutions and technologies to U.S. employers, enabling better financial outcomes for their employees and for those who depend on their employees through our retirement solutions, retail wealth services, and a comprehensive portfolio of benefits products. We are also a leading international asset manager, built on a foundation of institutional-quality fixed income and private asset strategies, with a well-established presence in U.S. markets and a large and growing business managing retail and institutional equity, fixed income and blended strategies for clients in Europe and Asia.
We have evolved as a company through the divestiture of substantially all of our closed block variable annuity, life insurance and legacy non-retirement annuity businesses and related assets. These divestitures align with our strategic focus on a capital light, high free cash flow business that maximizes value for our shareholders through capital return and accelerated profitable revenue growth while proactively managing risk.
We are focused on executing our mission to make a secure financial future possible-one person, one family and one institution at a time. Voya's scale, business mix, risk profile, and strong free cash flow generation are competitive differentiators, and we have a clear path to increasing free cash flow generation and Adjusted operating earnings growth via net revenue growth, margin expansion, and disciplined capital management.
On August 5, 2025, we announced we would return to using our prior segment names - Retirement and Employee Benefits, replacing Wealth Solutions and Health Solutions, respectively. The naming convention better reflects and aligns with the services and solutions we provide today in the client markets served by those segments. The change in names did not affect the amounts reported by segment in our financial statements. We will continue to provide our products and services through three segments: Retirement, Investment Management and Employee Benefits.
Retirement
Our Retirement segment provides retirement plan solutions and administration technology and services to employers. These products and services include full-service and recordkeeping-only defined contribution plan administration, stable value and fixed general account investment products and non-qualified plan administration. It also includes tools, guidance, and services to promote the financial well-being and retirement security of employees. Additionally, we provide individual retirement accounts and financial guidance and advisory services that enables us to deepen relationships with our retirement plan participants.
Revenue is earned from a diverse and complementary business mix and consists primarily of fee and investment income. Fee income is generated from asset based and participant based administrative, recordkeeping and advisory fees. Investment income derives from our general account assets and other funds. Because a significant portion of our revenues is tied to account values, our profitability is determined in part by the amount of assets we have under management, administration or advisement. This in turn depends on sales volumes to new and existing clients, net deposits from retirement plan participants, asset retention, and changes in the market value of account assets. Our profitability also depends on the difference between the investment income we earn on our general account assets, or our portfolio yield, and crediting rates on client accounts.
Investment Management
With global distribution capabilities, we offer domestic and international fixed income, equity, alternatives and multi-asset products and solutions across market sectors and investment styles through our actively managed, full-service investment management business. We aim to provide positive investment results that are repeatable and consistent, and deliver research-driven, risk-adjusted, client-oriented investment strategies and solutions and advisory services across asset classes, geographies and investment styles.
Through our institutional distribution channel and our Retirement business, we serve a variety of institutional clients, including public, corporate and multiemployer defined benefit and defined contribution retirement plans, endowments and foundations, and insurance companies. We are a market leader in providing third-party general account management services to insurance companies, with a focus on public and private fixed income asset strategies, and a client service model adapted for the particular needs of insurance company clients. We also serve individual investors by offering our mutual funds, separately managed accounts, and private and alternative funds through an intermediary-focused distribution platform or through affiliate and third-party retirement platforms. Our scaled and growing international retail business is conducted through sub-advisory agreements with investment vehicles sponsored by affiliates of AllianzGI and distributed in Europe and Asia.
Investment Management's primary source of revenue is management fees collected on the assets we manage. These fees are typically based on a percentage of AUM. In certain investment management fee arrangements, we may also receive performance-based incentive fees when the return on AUM exceeds certain benchmark returns or other performance hurdles. In addition, and to a lesser extent, Investment Management collects administrative fees on outside managed assets that are administered by our mutual fund platform and distributed primarily by our Retirement segment. Investment Management also receives fees as the primary investment manager of our general account, which is managed on a market-based pricing basis. Finally, Investment Management generates revenues from a portfolio of seed capital investments in private equity, collateralized loan obligations and various funds.
Employee Benefits
Our Employee Benefits segment provides worksite employee benefits, Health Account Solutions (Health Savings Account ("HSA")/Flexible Spending Account ("FSA")/Health Reimbursement Arrangements ("HRA") and COBRA administration), leave management, financial wellness, and decision support products and services to mid-size and large corporate employers and professional associations. In addition, our Employee Benefits segment serves the employer market by providing stop-loss coverage to employer plan sponsors that self-fund their pharmaceutical and medical benefits plans.
Our Employee Benefits segment also provides benefits and plan administration services to employers and health plans through our Benefitfocus business. Benefitfocus provides market-leading benefits enrollment and administration services to employers and plan enrollment services to health plans. It also provides a benefits marketplace through which employees can select and enroll in voluntary benefits offered by their employers. Our Benefitfocus platform is open-architecture and product-agnostic, enrolling and administering benefits from a variety of third-party carriers.
In addition, we also provide decision support tools through the Benefitfocus enrollment platform and through our MyVoyagemobile application, which provides a comprehensive guidance tool for employees to see their entire financial picture including their workplace benefits and savings. We support employers by taking on the administrative burden of benefits enrollment and administration, leave management, COBRA administration, and other obligations.
The Employee Benefits segment generates revenue from premiums and fees, investment income, mortality and morbidity income, and policy and other charges. Underwriting income comprises the majority of revenues in this segment and derives from the difference between premiums and mortality charges collected and benefits and expenses paid for group life, stop loss and voluntary benefits. Fee income is generated from services provided on benefits administration, leave management, HSA/FSA/HRA and COBRA administration and proprietary decision support tools. Investment income is driven by the spread between investment yields and credited rates (the interest and income that is credited to the policies) to policyholders on voluntary universal life, whole life products, and HSA invested assets, as well as the spread earned on policyholder reserves and target surplus.
Business Update
On January 2, 2025, the Company acquired the full-service retirement plan business of OneAmerica Financial. This acquisition was accomplished through the purchase of legal entities and an indemnity reinsurance agreement. The acquisition adds scale and a broader set of capabilities to the Company's full-service business in Retirement, including incremental assets in emerging and mid-market segments, employee stock ownership plan capabilities and opportunities for distribution partnerships. The
purchase consideration at closing included approximately $50 million in cash paid, and contingent consideration of up to $160 million payable in 2026, based on plan persistency and transition incentives.
Trends and Uncertainties
Market Conditions
We continue to monitor the rapidly changing global financial, political and economic environment, while actively managing the Company's businesses, investment portfolios and liquidity needs in light of current trends and uncertainties.
In the first and second quarters of 2025, new tariffs were announced on major U.S. trading partners, who have in turn responded with retaliatory actions. While many of these tariffs have been put on hold, there is significant uncertainty about the future direction of trade policies between the U.S. and its partners. This in turn has led to a significant increase in volatility across financial markets and has created more uncertainty in the economic outlook. We describe how such macroeconomic developments, risks, and uncertainties may impact the Company in Risk Factors in Part I, Item 1A, and in Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7. of our Annual Report on Form 10-K.
Operating Measures
In this MD&A, we discuss Adjusted operating earnings before income taxes and Adjusted operating revenues, each of which is a measure used by management to evaluate segment performance. For additional information on each measure, see SegmentsNote in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.
Assets Under Management ("AUM") and Assets Under Advisement ("AUA")
The following table presents AUM and AUA as of the dates indicated:
| As of June 30, | |||||||||||
| ($ in millions) | 2025 | 2024 | |||||||||
| AUM and AUA: | |||||||||||
| Retirement | $ | 757,244 | $ | 580,567 | |||||||
| Investment Management | 413,119 | 389,068 | |||||||||
| Employee Benefits | 1,963 | 1,938 | |||||||||
| Eliminations/Other | (117,098) | (110,300) | |||||||||
|
Total AUM and AUA (1)
|
$ | 1,055,228 | $ | 861,273 | |||||||
| AUM | 582,945 | 491,191 | |||||||||
|
AUA
|
472,283 | 370,082 | |||||||||
|
Total AUM and AUA (1)
|
$ | 1,055,228 | $ | 861,273 | |||||||
(1)Includes AUM and AUA related to the divested businesses, for which a substantial portion of the assets continue to be managed by our Investment Management segment.
Results of Operations - Consolidated
The following table presents our Condensed Consolidated Statements of Operations for the periods indicated:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | Change | 2025 | 2024 | Change | |||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||||||
| Net investment income | $ | 584 | $ | 518 | $ | 66 | $ | 1,144 | $ | 1,047 | $ | 97 | |||||||||||||||||||||||
| Fee income | 577 | 517 | 60 | 1,147 | 1,030 | 117 | |||||||||||||||||||||||||||||
| Premiums | 718 | 790 | (72) | 1,455 | 1,590 | (135) | |||||||||||||||||||||||||||||
| Net gains (losses) | (41) | (4) | (37) | (75) | 39 | (114) | |||||||||||||||||||||||||||||
| Other revenue | 100 | 98 | 2 | 204 | 186 | 18 | |||||||||||||||||||||||||||||
| Income (loss) related to consolidated investment entities | 43 | 114 | (71) | 75 | 192 | (117) | |||||||||||||||||||||||||||||
| Total revenues | 1,981 | 2,033 | (52) | 3,950 | 4,084 | (134) | |||||||||||||||||||||||||||||
| Benefits and expenses: | |||||||||||||||||||||||||||||||||||
| Interest credited and other benefits to contract owners/policyholders | 801 | 843 | (42) | 1,636 | 1,694 | (58) | |||||||||||||||||||||||||||||
| Operating expenses | 857 | 752 | 105 | 1,681 | 1,551 | 130 | |||||||||||||||||||||||||||||
| Net amortization of Deferred policy acquisition costs and Value of business acquired | 58 | 56 | 2 | 120 | 112 | 8 | |||||||||||||||||||||||||||||
| Interest expense | 28 | 30 | (2) | 60 | 60 | - | |||||||||||||||||||||||||||||
| Operating expenses related to consolidated investment entities | 49 | 76 | (27) | 92 | 104 | (12) | |||||||||||||||||||||||||||||
| Total benefits and expenses | 1,793 | 1,757 | 36 | 3,589 | 3,521 | 68 | |||||||||||||||||||||||||||||
| Income (loss) before income taxes | 188 | 276 | (88) | 361 | 563 | (202) | |||||||||||||||||||||||||||||
| Income tax expense (benefit) | 27 | 41 | (14) | 49 | 40 | 9 | |||||||||||||||||||||||||||||
| Net Income (loss) | 161 | 235 | (74) | 312 | 523 | (211) | |||||||||||||||||||||||||||||
| Less: Net income (loss) attributable to noncontrolling interest | (5) | 30 | (35) | (10) | 67 | (77) | |||||||||||||||||||||||||||||
| Less: Preferred stock dividends | 4 | 4 | - | 21 | 21 | - | |||||||||||||||||||||||||||||
| Net income (loss) available to our common shareholders | $ | 162 | $ | 201 | $ | (39) | $ | 301 | $ | 435 | $ | (134) | |||||||||||||||||||||||
Consolidated - Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024
Total Revenues
Total revenuesdecreased $52 million from $2,033 million to $1,981 million. The following items contributed to the overall decrease.
Net investment income increased $66 million from $518 million to $584 million primarily due to:
•income from onboarded OneAmerica assets;
•overall market impacts to limited partnership valuations;
•active portfolio management; and
•interest rate movements.
The increase was partially offset by:
•higher investment expenses reflecting the additional OneAmerica assets.
Fee income increased $60 million from $517 million to $577 million primarily due to:
•onboarded OneAmerica assets; and
•higher average equity markets and strong commercial momentum in Retirement and Investment Management.
Premiums decreased $72 million from $790 million to $718 million primarily due to:
•actions to improve the Stop Loss business in Employee Benefits.
Net gains (losses)decreased $37 million from a loss of $4 million to a loss of $41 million primarily due to:
•net unfavorable changes in derivative valuations due to interest rate movements; and
•higher credit allowances on private available-for-sale fixed maturity securities.
The unfavorable change was partially offset by:
•a favorable change in mark-to-market adjustments on securities subject to fair value option accounting primarily due to interest rate movements.
Income (loss) related to consolidated investment entities decreased $71 million from $114 million to $43 million primarily due to:
•overall market impacts to limited partnership valuations; and
•the deconsolidation of a collateral loan obligation in the prior period.
Total Benefits and Expenses
Total benefits and expensesincreased $36 million from $1,757 million to $1,793 million. The following items contributed to the overall increase.
Interest credited and other benefits to contract owners/policyholders decreased $42 million from $843 million to $801 million primarily due to:
•positive claim development in Stop Loss and a lower Group Life loss ratio in Employee Benefits; and
•a favorable change in market risk benefits driven by equity market performance and interest rate movements.
The decrease was partially offset by:
•interest credited associated with onboarded OneAmerica spread-based assets in Retirement;
•a higher Voluntary loss ratio in Employee Benefits; and
•lower amortization of the cost of reinsurance liability associated with businesses exited primarily due to lower lapses in the current period.
Operating expenses increased $105 million from $752 million to $857 million primarily due to:
•onboarded business from OneAmerica;
•higher severance costs in the current period;
•overall business growth in Retirement and Investment Management;
•an increase in the deferred compensation plan liability due to equity market movements;
•higher incentive compensation expenses in Corporate;
•investments in Short-Term Disability and Leave Management in Employee Benefits; and
•integration costs incurred in the current period associated with the OneAmerica transaction.
The increase was partially offset by:
•actions to efficiently manage spend; and
•lower integration costs associated with prior acquisitions in the current period.
Operating expenses related to consolidated investment entitiesdecreased $27 million from $76 million to $49 million primarily due to:
•the deconsolidation of a collateral loan obligation in the prior period.
Income Tax Expense
Income tax expensedecreased $14 million from $41 million to $27 million primarily due to:
•a decrease in income before income taxes.
Consolidated - Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024
Total Revenues
Total revenuesdecreased $134 million from $4,084 million to $3,950 million. The following items contributed to the overall decrease.
Net investment income increased $97 million from $1,047 million to $1,144 million primarily due to:
•income from onboarded OneAmerica assets;
•active portfolio management; and
•interest rate movements.
The increase was partially offset by:
•higher investment expenses reflecting the additional OneAmerica assets.
Fee income increased $117 million from $1,030 million to $1,147 million primarily due to:
•onboarded OneAmerica assets; and
•higher average equity markets and strong commercial momentum in Retirement and Investment Management.
Premiums decreased $135 million from $1,590 million to $1,455 million primarily due to:
•actions to improve the Stop Loss business, partially offset by growth in the Voluntary business in Employee Benefits.
Net gains (losses)changed $114 million from a gain of $39 million to a loss of $75 million primarily due to:
•net unfavorable changes in derivative valuations due to interest rate movements; and
•higher credit allowances on private available-for-sale fixed maturity securities.
The unfavorable change was partially offset by:
•a favorable change in mark-to-market adjustments on securities subject to fair value option accounting primarily due to interest rate movements.
Income (loss) related to consolidated investment entities decreased $117 million from $192 million to $75 million primarily due to:
•overall market impacts to limited partnership valuations; and
•the deconsolidation of a collateral loan obligation in the prior period.
Total Benefits and Expenses
Total benefits and expensesincreased $68 million from $3,521 million to $3,589 million. The following items contributed to the overall increase.
Interest credited and other benefits to contract owners/policyholders decreased $58 million from $1,694 million to $1,636 million primarily due to:
•positive claim development in Stop Loss.
The decrease was partially offset by:
•interest credited associated with onboarded OneAmerica spread-based assets in Retirement;
•higher loss ratios in Voluntary and Group Life products in Employee Benefits;
•an unfavorable change in market risk benefits driven by equity market performance and interest rate movements;
•unfavorable changes in the fair value of embedded derivatives associated with businesses exited primarily due to changes in interest rates, which are mostly offset by a corresponding amount in Net gains (losses); and
•lower amortization of the cost of reinsurance liability associated with businesses exited primarily due to lower lapses on post-level term products in the current period.
Operating expenses increased $130 million from $1,551 million to $1,681 million primarily due to:
•onboarded business from OneAmerica;
•higher severance costs in the current period;
•overall business growth in Retirement and Investment Management;
•investments in Short-Term Disability and Leave Management in Employee Benefits; and
•closing and integration costs incurred in the current period associated with the OneAmerica transaction.
The increase was partially offset by:
•actions to efficiently manage spend; and
•lower integration costs associated with prior acquisitions in the current period.
Operating expenses related to consolidated investment entitiesdecreased $12 million from $104 million to $92 million primarily due to:
•the deconsolidation of a collateral loan obligation in the prior period.
Income Tax Expense
Income tax expenseincreased $9 million from $40 million to $49 million primarily due to:
•the Security Life of Denver Company capital loss carryback recorded in 2024. For more details, see the Income Taxes
Note to the Consolidated Financial Statements included in Part II, Item 8. of the Annual Report on Form 10-K; and
•a change in noncontrolling interest.
The increase was partially offset by:
•a decrease in income before income taxes.
Adjustments from Income (Loss) before Income Taxes to Adjusted Operating Earnings (Loss) before Income Taxes
The summary below reconciles Income (loss) before income taxes to Adjusted operating earnings before income taxes for the periods indicated:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | 2025 | 2024 | Change | |||||||||||||||||||||||||||
| Income (loss) before income taxes | $ | 188 | $ | 276 | $ | (88) | $ | 361 | $ | 563 | $ | (202) | ||||||||||||||||||||
|
Less adjustments:
|
||||||||||||||||||||||||||||||||
| Net investment gains (losses) | (29) | 20 | (49) | (31) | 84 | (115) | ||||||||||||||||||||||||||
| Income (loss) related to businesses exited or to be exited through reinsurance or divestment | (30) | (37) | 7 | (69) | (69) | - | ||||||||||||||||||||||||||
| Income (loss) attributable to noncontrolling interests | (5) | 30 | (35) | (10) | 67 | (77) | ||||||||||||||||||||||||||
| Dividend payments made to preferred shareholders | 4 | 4 | - | 21 | 21 | - | ||||||||||||||||||||||||||
|
Other adjustments(1)
|
(41) | (12) | (29) | (71) | (35) | (36) | ||||||||||||||||||||||||||
| Total adjustments to income (loss) before income taxes | (101) | 5 | (106) | (160) | 68 | (228) | ||||||||||||||||||||||||||
|
Total adjusted operating earnings before income taxes
|
$ | 289 | $ | 271 | $ | 18 | $ | 521 | $ | 494 | $ | 27 | ||||||||||||||||||||
|
Adjusted operating earnings before income taxes by segment:
|
||||||||||||||||||||||||||||||||
| Retirement | $ | 235 | $ | 214 | $ | 21 | $ | 442 | $ | 400 | $ | 42 | ||||||||||||||||||||
| Employee Benefits | 69 | 60 | 9 | 115 | 119 | (4) | ||||||||||||||||||||||||||
| Investment Management | 65 | 64 | 1 | 118 | 117 | 1 | ||||||||||||||||||||||||||
| Corporate | (67) | (54) | (13) | (131) | (118) | (13) | ||||||||||||||||||||||||||
|
Total including noncontrolling interest
|
302 | 284 | 18 | 545 | 518 | 27 | ||||||||||||||||||||||||||
|
Less: Earning (loss) attributable to the noncontrolling interest(2)
|
13 | 13 | - | 24 | 24 | - | ||||||||||||||||||||||||||
| Total | $ | 289 | $ | 271 | $ | 18 | $ | 521 | $ | 494 | $ | 27 | ||||||||||||||||||||
(1) Primarily consists of acquisition and integration costs associated with recent transactions and amortization of acquisition-related intangible assets. For the three and six months ended June 30, 2025, also includes $23 million and $31 million, pre-tax of severance costs, respectively.
(2) Reflects Allianz's 24% ownership stake in the results of VIM Holdings LLC.
Consolidated - Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024
Adjustments to Income (loss) before income taxes
Net investment gains (losses)changed $49 million from a gain of $20 million to a loss of $29 million primarily due to:
•net unfavorable changes in derivative valuations due to interest rate movements; and
•higher credit allowances on private available-for-sale fixed maturity securities.
The unfavorable change was partially offset by:
•a favorable change in mark-to-market adjustments on securities subject to fair value option accounting primarily due to interest rate movements; and
•favorable market risk benefit remeasurements primarily due to equity market performance and interest rate movements in the current period.
Other adjustments to operating earningsdecreased $29 million from a loss of $12 million to a loss of $41 million primarily due to:
•higher severance costs in the current period; and
•integration costs incurred in the current period associated with the OneAmerica transaction.
The decrease was partially offset by:
•lower integration costs associated with prior acquisitions in the current period.
Consolidated - Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024
Adjustments to Income (loss) before income taxes
Net investment gains (losses) changed $115 million from a gain of $84 million to a loss of $31 million primarily due to:
•net unfavorable changes in derivative valuations due to interest rate movements;
•higher credit allowances on available-for-sale private fixed maturity securities; and
•an unfavorable change in market risk benefits driven by equity market performance and interest rate movements.
The unfavorable change was partially offset by:
•a favorable change in mark-to-market adjustments on securities subject to fair value option accounting primarily due to interest rate movements.
Other adjustments to operating earningsdecreased $36 million from a loss of $35 million to a loss of $71 million primarily due to:
•higher severance costs in the current period; and
•closing and integration costs incurred in the current period associated with the OneAmerica transaction.
The decrease was partially offset by:
•lower integration costs associated with prior acquisitions in the current period.
Results of Operations - Segment by Segment
Adjusted operating earnings before income taxes is the measure of segment profit or loss management uses to evaluate segment performance. Adjusted operating earnings before income taxes should not be viewed as a substitute for GAAP pre-tax income. We believe that the presentation of segment Adjusted operating earnings before income taxes as we measure it for management purposes enhances the understanding of our business by reflecting the underlying performance of our core operations and facilitating a more meaningful trend analysis. Refer to the SegmentsNote to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for further information on the presentation of segment results, our definition of Adjusted operating earnings before income taxes and Adjusted operating revenues, which are both non-GAAP financial measures, and a reconciliation to the most directly comparable GAAP measure.
Adjusted operating benefits and expenses is a measure of our segment operating benefits and expenses and a non-GAAP financial measure. Each segment's Adjusted operating benefits and expenses are calculated by adjusting Total benefits and expenses for the following items:
•Changes in market risk benefits;
•Benefits and expenses related to businesses exited or to be exited through reinsurance or divestment;
•Expenses attributable to noncontrolling interests;
•Dividend payments made to preferred shareholders are included in adjusted operating benefits and expenses to reflect expenses related to our common shareholders;
•Other adjustments include:
◦Income (loss) related to early extinguishment of debt;
◦Impairment of goodwill and intangible assets;
◦Amortization of acquisition-related intangible assets as well as contingent consideration fair value adjustments incurred in connection with certain acquisitions;
◦Expected return on plan assets net of interest costs associated with our qualified defined benefit pension plan and immediate recognition of net actuarial gains (losses) related to all of our pension and other postretirement benefit obligations and gains (losses) from plan amendments and curtailments;
◦Commissions paid to our broker-dealers for sales of non-proprietary products and other items where the income is passed on to third parties, which are reflected in adjusted operating revenue with the fee income related to those products;
◦Other items not indicative of normal operations or performance of our segments or that may be related to events such as capital or organizational restructurings, including certain costs related to debt and equity offerings, acquisition / merger integration expenses, severance and other third-party expenses associated with such activities, and expenses attributable to vacant real estate.
The summary below reconciles Total benefits and expenses to Adjusted operating benefits and expenses for the periods indicated:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Total benefits and expenses | $ | 1,793 | $ | 1,757 | $ | 3,589 | $ | 3,521 | |||||||||||||||
|
Less adjustments:
|
|||||||||||||||||||||||
|
Changes in market risk benefits
|
(9) | (4) | (12) | (20) | |||||||||||||||||||
|
Benefits and expenses related to businesses exited or to be exited through reinsurance or divestment
|
60 | 50 | 127 | 106 | |||||||||||||||||||
| Expenses attributable to noncontrolling interests | 54 | 85 | 95 | 124 | |||||||||||||||||||
| Dividend payments made to preferred shareholders | (4) | (4) | (21) | (21) | |||||||||||||||||||
| Other adjustments | 95 | 54 | 158 | 128 | |||||||||||||||||||
|
Total adjusted operating benefits and expenses
|
$ | 1,598 | $ | 1,576 | $ | 3,243 | $ | 3,206 | |||||||||||||||
|
Adjusted operating benefits and expenses by segment:
|
|||||||||||||||||||||||
| Retirement | $ | 589 | $ | 516 | $ | 1,180 | $ | 1,050 | |||||||||||||||
| Investment Management | 174 | 169 | 364 | 351 | |||||||||||||||||||
| Employee Benefits | 763 | 832 | 1,558 | 1,678 | |||||||||||||||||||
| Corporate | 72 | 59 | 142 | 127 | |||||||||||||||||||
|
Total adjusted operating benefits and expenses
|
$ | 1,598 | $ | 1,576 | $ | 3,243 | $ | 3,206 | |||||||||||||||
Retirement
The following table presents Adjusted operating earnings before income taxes of our Retirement segment for the periods indicated:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Adjusted operating revenues: | |||||||||||||||||||||||
| Net investment income and net gains (losses) | $ | 482 | $ | 443 | $ | 939 | $ | 880 | |||||||||||||||
| Fee income | 319 | 271 | 637 | 534 | |||||||||||||||||||
| Other revenue | 24 | 17 | 46 | 35 | |||||||||||||||||||
| Total adjusted operating revenues | 824 | 730 | 1,622 | 1,450 | |||||||||||||||||||
|
Adjusted operating benefits and expenses:
|
|||||||||||||||||||||||
| Interest credited and other benefits to contract owners/policyholders | 232 | 213 | 463 | 429 | |||||||||||||||||||
| Operating expenses | 330 | 282 | 662 | 579 | |||||||||||||||||||
| Net amortization of DAC/VOBA | 27 | 21 | 54 | 42 | |||||||||||||||||||
|
Total adjusted operating benefits and expenses
|
589 | 516 | 1,180 | 1,050 | |||||||||||||||||||
| Adjusted operating earnings before income taxes | $ | 235 | $ | 214 | $ | 442 | $ | 400 | |||||||||||||||
The following table presents Net revenue and Adjusted operating margin for our Retirement segment for the periods indicated:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Adjusted operating earnings before income taxes | $ | 235 | $ | 214 | $ | 442 | $ | 400 | |||||||||||||||
| Total adjusted operating revenues | 824 | 730 | 1,622 | 1,450 | |||||||||||||||||||
| Less: Interest credited and other benefits to contract owners/policyholders | 232 | 213 | 463 | 429 | |||||||||||||||||||
| Net revenue | $ | 592 | $ | 517 | $ | 1,159 | $ | 1,021 | |||||||||||||||
|
Adjusted operating margin (1)
|
39.7 | % | 41.4 | % | 38.2 | % | 39.2 | % | |||||||||||||||
(1) Adjusted operating earnings before income taxes divided by Net revenue.
The following table presents Total Client Assets by product group, which comprise total AUM and AUA, for our Retirement segment as of the dates indicated:
| As of June 30, | |||||||||||
| ($ in millions) | 2025 | 2024 | |||||||||
|
Full Service (1)
|
$ | 270,477 | $ | 199,196 | |||||||
|
Recordkeeping (1)
|
419,669 | 319,819 | |||||||||
| Total Defined Contribution | 690,146 | 519,015 | |||||||||
| Investment-only Stable Value | 36,678 | 33,985 | |||||||||
|
Retail Client and Other Assets (2)
|
38,507 | 35,014 | |||||||||
|
Eliminations
|
(8,087) | (7,446) | |||||||||
|
Total Client Assets by product group
|
$ | 757,244 | $ | 580,567 | |||||||
(1)Full Service and Recordkeeping assets as of June 30, 2025 include the recast of ending assets as of March 31, 2025 to reflect the OneAmerica book of business consistent with Voya's definition. There was no change to Total Defined Contribution assets as a result of this recast.
(2)Other assets includes other guaranteed payout products and non-qualified retirement plans.
The following table presents Total Client Assets by source of earnings, which comprise total AUM and AUA, for our Retirement segment as of the dates indicated:
| As of June 30, | |||||||||||
| ($ in millions) | 2025 | 2024 | |||||||||
| Fee-based | $ | 662,433 | $ | 493,994 | |||||||
|
Spread-based (1)
|
33,220 | 30,335 | |||||||||
| Investment-only Stable Value | 36,678 | 33,985 | |||||||||
| Retail Client Assets | 33,000 | 29,699 | |||||||||
|
Eliminations
|
(8,087) | (7,446) | |||||||||
|
Total Client Assets by source of earnings
|
$ | 757,244 | $ | 580,567 | |||||||
(1)Spread-based client assets include Full Service, as well as proprietary IRA mutual fund products and other guaranteed payout products.
The following table presents Full Service, Recordkeeping, and Stable Value net flows for our Retirement segment for the periods indicated:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Deposits | $ | 7,571 | $ | 5,811 | $ | 16,046 | $ | 12,221 | |||||||||||||||
| Surrenders, benefits and product charges | (8,692) | (6,409) | (17,996) | (12,796) | |||||||||||||||||||
|
Total Full Service Net flows(1)
|
(1,121) | (597) | (1,949) | (576) | |||||||||||||||||||
|
Recordkeeping Net Flows(1)
|
12,732 | (1,027) | 42,964 | (1,339) | |||||||||||||||||||
|
Total Defined Contribution Net Flows(2)
|
$ | 11,611 | $ | (1,625) | $ | 41,016 | $ | (1,914) | |||||||||||||||
| Investment-only Stable Value Net Flows | $ | 252 | $ | (1,061) | $ | 1,411 | $ | (1,980) | |||||||||||||||
(1)Full Service and Recordkeeping net flows for the six months ended June 30, 2025 include the recast of net flows for the three months ended March 31, 2025 to reflect the OneAmerica book of business consistent with Voya's definition. There was no change to Total Defined Contribution Net Flows as a result of this recast.
(2)Total of Full Service and Recordkeeping.
Retirement - Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024
Adjusted operating earnings before income taxes increased $21 million from $214 million to $235 million primarily due to:
•higher revenues benefiting from onboarded OneAmerica fee and spread-based assets, favorable market impacts, and positive defined contribution flows;
•higher alternative investment income; and
•actions to efficiently manage spend.
The increase was partially offset by:
•higher expenses reflecting the onboarded business and VOBA asset amortization from the OneAmerica transaction and investments in business growth.
Retirement - Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024
Adjusted operating earnings before income taxes increased $42 million from $400 million to $442 million primarily due to:
•higher revenues benefiting from onboarded OneAmerica fee and spread-based assets, favorable market impacts, and positive defined contribution flows;
•higher alternative investment income; and
•actions to efficiently manage spend.
The increase was partially offset by:
•higher expenses reflecting the onboarded business and VOBA asset amortization from the OneAmerica transaction and investments in business growth.
Investment Management
The following table presents Adjusted operating earnings before income taxes of our Investment Management segment for the periods indicated:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
|
Adjusted operating revenues:
|
|||||||||||||||||||||||
| Net investment income and net gains (losses) | $ | 5 | $ | 8 | $ | 11 | $ | 16 | |||||||||||||||
| Fee income | 237 | 225 | 472 | 452 | |||||||||||||||||||
| Other revenue | (3) | 1 | (1) | - | |||||||||||||||||||
| Total adjusted operating revenues | 239 | 234 | 482 | 468 | |||||||||||||||||||
|
Adjusted operating benefits and expenses:
|
|||||||||||||||||||||||
| Operating expenses | 174 | 169 | 364 | 351 | |||||||||||||||||||
|
Total adjusted operating benefits and expenses
|
174 | 169 | 364 | 351 | |||||||||||||||||||
| Adjusted operating earnings before income taxes including noncontrolling interest | 65 | 64 | 118 | 117 | |||||||||||||||||||
|
Less: Earnings (loss) attributable to the noncontrolling interest (1)
|
14 | 14 | 26 | 26 | |||||||||||||||||||
| Adjusted operating earnings before income taxes | $ | 51 | $ | 50 | $ | 92 | $ | 92 | |||||||||||||||
(1) Reflects Allianz's 24% ownership stake in the results of VIM Holdings LLC.
The following table presents Net revenue and Adjusted operating margin for our Investment Management segment for the periods indicated:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Adjusted operating earnings before income taxes including noncontrolling interest | $ | 65 | $ | 64 | $ | 118 | $ | 117 | |||||||||||||||
| Total adjusted operating revenues | 239 | 234 | 482 | 468 | |||||||||||||||||||
| Net revenue | $ | 239 | $ | 234 | $ | 482 | $ | 468 | |||||||||||||||
|
Adjusted operating margin (1)
|
27.3 | % | 27.5 | % | 24.5 | % | 25.1 | % | |||||||||||||||
(1)Adjusted operating earnings before income taxes divided by Net revenue.
Our Investment Management segment operating revenues include the following intersegment revenues, primarily consisting of asset-based management and administration fees, for the periods indicated:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Investment Management intersegment revenues | $ | 21 | $ | 19 | $ | 43 | $ | 39 | |||||||||||||||
The following table presents AUM and AUA for our Investment Management segment as of the dates indicated:
| As of June 30, | |||||||||||
| ($ in millions) | 2025 | 2024 | |||||||||
| External clients: | |||||||||||
|
Institutional(1)
|
$ | 166,833 | $ | 152,165 | |||||||
|
Retail(1)
|
156,329 | 150,341 | |||||||||
| Total external clients | 323,162 | 302,506 | |||||||||
| General account | 36,428 | 33,884 | |||||||||
|
Total AUM
|
359,589 | 336,390 | |||||||||
|
AUA(2)
|
53,530 | 52,678 | |||||||||
|
Total AUM and AUA
|
$ | 413,119 | $ | 389,068 | |||||||
(1) Includes assets associated with the divested businesses.
(2) Includes assets sourced by other segments and also reported as AUA or AUM by such other segments. Assets Under Advisement, presented in AUA, includes advisory assets, mutual fund, general account and stable value assets.
The following table presents net flows for our Investment Management segment for the periods indicated:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Net Flows: | |||||||||||||||||||||||
| Institutional | $ | 952 | $ | 3,134 | $ | 6,139 | $ | 1,909 | |||||||||||||||
|
Retail (1)
|
874 | 1,640 | 3,370 | 3,440 | |||||||||||||||||||
|
Net Flows excluding Net Flows from Divested Businesses
|
1,826 | 4,774 | 9,509 | 5,348 | |||||||||||||||||||
|
Divested businesses
|
(259) | (623) | (633) | (1,274) | |||||||||||||||||||
| Total | $ | 1,567 | $ | 4,151 | $ | 8,877 | $ | 4,075 | |||||||||||||||
(1) Includes reinvested dividends.
Investment Management - Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024
Adjusted operating earnings before income taxes including noncontrolling interestincreased $1 million from $64 million to $65 million primarily due to:
•higher fee-based revenues benefiting from strong commercial momentum and favorable market impacts; and
•actions to efficiently manage spend.
These favorable changes were offset by:
•higher operating expenses driven by business growth; and
•lower investment capital returns primarily driven by overall market performance.
Investment Management - Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024
Adjusted operating earnings before income taxes including Allianz noncontrolling interestincreased $1 million from $117 million to $118 million primarily due to:
•higher fee-based revenues benefiting from strong commercial momentum and favorable market impacts; and
•actions to efficiently manage spend.
These favorable changes were offset by:
•higher operating expenses driven by business growth; and
•lower investment capital returns primarily driven by overall market performance.
Employee Benefits
The following table presents Adjusted operating earnings before income taxes of the Employee Benefits segment for the periods indicated:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
|
Adjusted operating revenues:
|
|||||||||||||||||||||||
| Net investment income and net gains (losses) | $ | 43 | $ | 34 | $ | 80 | $ | 73 | |||||||||||||||
| Fee income | 21 | 16 | 39 | 34 | |||||||||||||||||||
| Premiums | 720 | 791 | 1,454 | 1,588 | |||||||||||||||||||
| Other revenue | 48 | 50 | 100 | 102 | |||||||||||||||||||
|
Total adjusted operating revenues
|
832 | 892 | 1,673 | 1,798 | |||||||||||||||||||
|
Adjusted operating benefits and expenses:
|
|||||||||||||||||||||||
| Interest credited and other benefits to contract owners/policyholders | 529 | 591 | 1,081 | 1,204 | |||||||||||||||||||
| Operating expenses | 227 | 232 | 461 | 458 | |||||||||||||||||||
| Net amortization of DAC/VOBA | 7 | 8 | 16 | 17 | |||||||||||||||||||
|
Total adjusted operating benefits and expenses
|
763 | 832 | 1,558 | 1,678 | |||||||||||||||||||
|
Adjusted operating earnings before income taxes
|
$ | 69 | $ | 60 | $ | 115 | $ | 119 | |||||||||||||||
The following table presents Net revenue and Adjusted operating margin for our Employee Benefits segment for the periods indicated:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Adjusted operating earnings before income taxes | $ | 69 | $ | 60 | $ | 115 | $ | 119 | |||||||||||||||
| Total adjusted operating revenues | 832 | 892 | 1,673 | 1,798 | |||||||||||||||||||
| Less: Interest credited and other benefits to contract owners/policyholders | 529 | 591 | 1,081 | 1,204 | |||||||||||||||||||
| Net revenue | $ | 303 | $ | 301 | $ | 592 | $ | 593 | |||||||||||||||
|
Adjusted operating margin (1)
|
22.8 | % | 19.9 | % | 19.5 | % | 20.1 | % | |||||||||||||||
(1)Adjusted operating earnings before income taxes divided by Net revenue.
The following table presents sales, gross premiums and in-force for our Employee Benefits segment for the periods indicated:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Sales by Product Line: | |||||||||||||||||||||||
| Group life and Disability | $ | 22 | $ | 18 | $ | 96 | $ | 148 | |||||||||||||||
| Stop loss | 14 | 23 | 279 | 560 | |||||||||||||||||||
| Total group products | 36 | 41 | 375 | 708 | |||||||||||||||||||
|
Voluntary and Other (1)
|
37 | 38 | 136 | 180 | |||||||||||||||||||
| Total sales by product line | $ | 73 | $ | 78 | $ | 511 | $ | 887 | |||||||||||||||
| Total gross premiums and deposits | $ | 843 | $ | 904 | $ | 1,689 | $ | 1,804 | |||||||||||||||
| Group life and Disability | $ | 977 | $ | 996 | $ | 977 | $ | 996 | |||||||||||||||
| Stop loss | 1,569 | 1,845 | 1,569 | 1,845 | |||||||||||||||||||
|
Voluntary and Other (1)
|
1,103 | 1,030 | 1,103 | 1,030 | |||||||||||||||||||
| Total annualized in-force premiums and fees | $ | 3,649 | $ | 3,870 | $ | 3,649 | $ | 3,870 | |||||||||||||||
| Loss Ratios: | |||||||||||||||||||||||
|
Group life (interest adjusted)
|
74.3 | % | 79.3 | % | 82.2 | % | 80.2 | % | |||||||||||||||
| Stop loss | 80.3 | % | 83.2 | % | 77.6 | % | 83.7 | % | |||||||||||||||
|
Total Aggregate Loss Ratio
|
70.7 | % | 72.9 | % | 71.4 | % | 73.3 | % | |||||||||||||||
|
Total Aggregate Loss Ratio Trailing Twelve Months
|
79.0 | % | 72.3 | % | 79.0 | % | 72.3 | % | |||||||||||||||
(1)Includes benefit administration annual recurring revenue and Health Account Solutions products.
Employee Benefits - Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024
Adjusted Operating earnings before income taxes increased $9 million from $60 million to $69 million primarily due to:
•lower benefits to policyholders primarily due to positive claim development in Stop Loss and a lower loss ratio in Group Life, partially offset by a higher Voluntary loss ratio;
•lower premium-driven expenses and actions to efficiently manage spend; and
•higher alternative investment income.
The increase was partially offset by:
•lower revenues primarily driven by actions to improve the Stop Loss business; and
•investments in Short-Term Disability and Leave Management.
Employee Benefits - Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024
Adjusted Operating earnings before income taxesdecreased $4 million from $119 million to $115 million primarily due to:
•lower revenues primarily driven by actions to improve the Stop Loss business; and
•investments in Short-Term Disability and Leave Management.
The decrease was partially offset by:
•lower benefits to policyholders primarily due to positive claim development in Stop Loss, net of higher loss ratios in Voluntary and Group Life;
•higher alternative investment income; and
•lower premium-driven expenses and actions to efficiently manage spend.
Corporate
The following table presents Adjusted operating earnings before income taxes of Corporate for the periods indicated:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Adjusted operating revenues: | |||||||||||||||||||||||
| Net investment income and net gains (losses) | $ | 5 | $ | 4 | $ | 10 | $ | 8 | |||||||||||||||
| Other revenue | - | 1 | 1 | 1 | |||||||||||||||||||
| Total adjusted operating revenues | 5 | 4 | 11 | 9 | |||||||||||||||||||
|
Adjusted operating benefits and expenses:
|
|||||||||||||||||||||||
|
Operating expenses(1)
|
40 | 26 | 62 | 49 | |||||||||||||||||||
|
Interest expense(2)
|
32 | 33 | 80 | 78 | |||||||||||||||||||
|
Total adjusted operating benefits and expenses
|
72 | 59 | 142 | 127 | |||||||||||||||||||
| Adjusted operating earnings before income taxes including noncontrolling interest | (67) | (54) | (131) | (118) | |||||||||||||||||||
|
Less: Earnings (loss) attributable to the noncontrolling interest
|
(1) | (1) | (2) | (2) | |||||||||||||||||||
| Adjusted operating earnings before income taxes | $ | (67) | $ | (53) | $ | (129) | $ | (117) | |||||||||||||||
(1)Includes expenses from corporate activities and expenses not allocated to our segments.
(2)Includes dividend payments made to preferred shareholders.
Corporate - Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024
Adjusted operating earnings before income taxes including noncontrolling interestdecreased $13 million from a loss of $54 million to a loss of $67 million primarily due to:
•adjustments to incentive compensation and higher expenses not directly related to the segments.
Corporate - Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024
Adjusted operating earnings before income taxes including Allianz noncontrolling interestdecreased $13 million from a loss of $118 million to a loss of $131 million primarily due to:
•higher expenses not directly related to the segments and adjustments to incentive compensation.
Alternative Investment Income
Investment income on certain alternative investments can be volatile due to changes in market conditions. The following table presents the amount of investment income (loss) on certain alternative investments that is included in segment Adjusted operating earnings before income taxes and the average level of assets in each segment, prior to intercompany eliminations, which excludes alternative investments and income that are a component of Income (loss) related to businesses exited or to be exited through reinsurance or divestment. These alternative investments are carried at fair value, which is estimated based on the NAV of these funds. While investment income on these assets can be volatile, based on current plans, we expect to earn 9% on these assets over the long term.
The following table presents alternative investment income and average assets of alternative investments for the periods indicated:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
|
Retirement:
|
|||||||||||||||||||||||
| Alternative investment income | $ | 42 | $ | 34 | $ | 64 | $ | 58 | |||||||||||||||
| Average alternative investment | 1,590 | 1,536 | 1,590 | 1,498 | |||||||||||||||||||
|
Investment Management:
|
|||||||||||||||||||||||
| Alternative investment income | 4 | 7 | 9 | 13 | |||||||||||||||||||
| Average alternative investment | 344 | 349 | 335 | 331 | |||||||||||||||||||
|
Employee Benefits:
|
|||||||||||||||||||||||
| Alternative investment income | 7 | 2 | 10 | 8 | |||||||||||||||||||
| Average alternative investment | 268 | 220 | 253 | 231 | |||||||||||||||||||
Liquidity and Capital Resources
Liquidity refers to our ability to access sufficient sources of cash to meet the requirements of our operating, investing and financing activities. Capital refers to our long-term financial resources available to support business operations and future growth. Our ability to generate and maintain sufficient liquidity and capital depends on the profitability of the businesses, timing of cash flows on investments and products, general economic conditions and access to the capital markets and the other sources of liquidity and capital described herein.
The following presents a review of our sources and uses of liquidity and capital and should be read in its entirety and in conjunction with the Off-Balance Sheet Arrangements discussion included further below.
Consolidated Sources and Uses of Liquidity and Capital
Our principal available sources of liquidity are product charges, investment income, proceeds from the maturity and sale of investments, proceeds from debt issuance and borrowing facilities, equity securities issuance, repurchase agreements, contract deposits and securities lending. Primary uses of these funds are payments of policyholder benefits, commissions and operating expenses, interest credits, dividends, debt maturities and redemptions, share repurchases, investment purchases, business acquisitions and contract maturities, withdrawals and surrenders.
Parent Company Sources and Uses of Liquidity
Voya Financial, Inc. is largely dependent on cash flows from its operating subsidiaries to meet its obligations. The principal sources of funds available to Voya Financial, Inc. include dividends and returns of capital from its operating subsidiaries, as well as cash and short-term investments, and proceeds from debt issuances, borrowing facilities and equity securities issuances.
These sources of funds include the $500 million revolving credit sublimit of our senior unsecured credit facility and reciprocal borrowing facilities maintained with Voya Financial, Inc.'s subsidiaries as well as alternate sources of liquidity described below.
We estimate that our excess capital (which we define as the amount of total adjusted capital in our insurance subsidiaries above our 375% RBC target, plus the amount of holding company liquidity above our $200 million target) as of June 30, 2025, was approximately $0.3 billion. As of June 30, 2025, our estimated combined RBC ratio was 401%. Excess capital and the estimated RBC ratio are both adjusted for certain intercompany loans and transactions.
Voya Financial, Inc.'s primary sources and uses of cash for the periods indicated are presented in the following table:
| Six Months Ended June 30, | |||||||||||
| ($ in millions) | 2025 | 2024 | |||||||||
| Beginning cash and cash equivalents balance | $ | 217 | $ | 206 | |||||||
| Sources: | |||||||||||
| Dividends and returns of capital from subsidiaries | 422 | 473 | |||||||||
|
Loans from subsidiaries, net of repayments
|
286 | 65 | |||||||||
| Amounts received from subsidiaries under tax sharing agreements, net | 28 | 51 | |||||||||
| Refund of income taxes, net | 1 | - | |||||||||
|
Settlement of amounts due from subsidiaries and affiliates, net
|
36 | 27 | |||||||||
| Collateral received, net | 2 | - | |||||||||
| Other, net | - | 34 | |||||||||
| Total sources | 775 | 650 | |||||||||
| Uses: | |||||||||||
| Payment of interest expense | 53 | 61 | |||||||||
| Capital provided to subsidiaries | 25 | - | |||||||||
| Payment for business acquisitions | 50 | - | |||||||||
|
Loans to subsidiaries, net of repayments
|
75 | 93 | |||||||||
| Payment of income taxes, net | - | 2 | |||||||||
|
Common stock acquired - share repurchase
|
- | 348 | |||||||||
| Share-based compensation | 36 | 38 | |||||||||
| Dividends paid on preferred stock | 21 | 21 | |||||||||
| Dividends paid on common stock | 87 | 81 | |||||||||
|
Acquisition of short-term investments, net
|
60 | - | |||||||||
|
Debt maturity(1)
|
400 | - | |||||||||
| Collateral delivered, net | - | 10 | |||||||||
| Asset purchases and investment expense, net | - | 14 | |||||||||
| Derivatives, net | 5 | - | |||||||||
| Other, net | 31 | - | |||||||||
| Total uses | 843 | 668 | |||||||||
|
Net increase (decrease) in cash and cash equivalents
|
(68) | (18) | |||||||||
| Ending cash and cash equivalents balance | $ | 149 | $ | 188 | |||||||
|
Liquid short-term investments(2)
|
80 | 29 | |||||||||
|
Ending cash, cash equivalents and liquid short-term investments
|
$ | 229 | $ | 217 | |||||||
(1)See Pre-capitalized Trust Securitiesbelow for further detail.
(2)Short-term investments have maturities of one year or less, but greater than three months, are liquid and primarily consist of commercial paper investments rated BBB+ or greater.
Liquidity
We manage liquidity through access to substantial investment portfolios as well as a variety of other sources of liquidity including committed credit facilities, securities lending and repurchase agreements. Our asset-liability management ("ALM") process considers the expected maturity of investments and expected benefit payments as well as the specific nature and risk profile of the liabilities. As part of our liquidity management process, we model different scenarios to determine whether existing assets are adequate to meet projected cash flows.
Capitalization
The primary components of our capital structure consist of debt and equity securities. Our capital position is supported by cash flows within our operating subsidiaries, the availability of borrowed funds under liquidity facilities, and any additional capital we raise to invest in the growth of the business and for general corporate purposes. We manage our capital position based on a variety of factors including, but not limited to, our financial strength, the credit rating of Voya Financial, Inc. and of its insurance company subsidiaries and general macroeconomic conditions. We may repurchase or otherwise retire our debt and preferred stock and take other steps to reduce our debt and preferred stock or otherwise improve our financial position. These actions could include open market repurchases, negotiated repurchases, tender offers or other retirements of outstanding debt and opportunistic refinancing of debt. The amount that may be repurchased or otherwise retired, if any, will depend on market conditions, trading levels, cash position, compliance with covenants and other considerations.
See the Consolidated and Nonconsolidated Investment EntitiesNote to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for additional details over changes in noncontrolling interest during the year and impacting capitalization.
Share Repurchase Program and Dividends to Common Shareholders
See the Shareholders' EquityNote in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for information relating to authorizations by the Board of Directors to repurchase our shares and amounts of common stock repurchased pursuant to such authorizations during the six months ended June 30, 2025. As of June 30, 2025, our remaining repurchase capacity under the Board's authorization was $761 million.
The following table provides a summary of common dividends and repurchases of common shares for the periods indicated:
| Six Months Ended June 30, | |||||||||||
| ($ in millions) | 2025 | 2024 | |||||||||
| Dividends paid on common shares | $ | 87 | $ | 81 | |||||||
| Repurchases of common shares (at cost) | - | 346 | |||||||||
| Total | $ | 87 | $ | 427 | |||||||
Debt
As of June 30, 2025, we had $447 million of short-term debt borrowings outstanding consisting entirely of the current portion of long-term debt. The following table summarizes our borrowing activities for the six months ended June 30, 2025:
| ($ in millions) | Beginning Balance | Issuance | Maturities and Repayment |
Other Changes(1)
|
Ending Balance | ||||||||||||||||||||||||
| Total long-term debt | $ | 2,103 | $ | - | $ | - | $ | (446) | $ | 1,657 | |||||||||||||||||||
(1)Other changes represent the reclassification of $446 million of debt maturing in 2026 from long-term to short-term debt.
See the Financing Agreementsand Shareholders' Equity Notes to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for additional details on changes in debt and equity during the year.
Pre-capitalized Trust Securities
See the Financing AgreementsNote to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for information on the Put Option and the 3.976% Senior Notes, due 2025. The Company repaid the $400 million outstanding principal amount of its 3.976% Senior Notes upon maturity on February 14, 2025. The put option agreement expired on February 15, 2025.
On May 21, 2025, we entered into a 10-year Facility Agreement with a Delaware trust (the "Trust") following the completion of a private placement of Trust securities for $600 million of P-Caps, conducted pursuant to Rule 144A under the Securities Act. The Trust invested the proceeds from this offering in a portfolio of U.S. Treasury principal and interest strips ("Treasury securities").
Under the Facility Agreement, we have the right, on one or more occasions, to issue and sell up to $600 million of its 6.012% Senior Notes to the Trust in exchange for a corresponding amount of Treasury securities held by the Trust. In consideration for this right, we pay the Trust a semi-annual facility fee at a rate of 1.5175% per annum on the unexercised portion of the facility. These fees are recorded in Operating expenses in the Condensed Consolidated Statements of Operations. We also reimburse the Trust for its administrative expenses.
We may redeem the notes before maturity at par or, if higher, at a make-whole redemption price, plus accrued and unpaid interest. The P-Caps will be redeemed by the Trust on May 15, 2035, or earlier upon redemption of the 6.012% Senior Notes.
Credit Facilities
See the Financing AgreementsNote in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for information on credit facilities.
Voya Financial, Inc. Credit Support of Subsidiaries
Voya Financial, Inc. provide guarantees to certain of our subsidiaries to support various business requirements:
•Voya Financial, Inc. guarantees the obligations of Voya Holdings under the $13 million principal amount of the 8.42% Equitable of Iowa Companies Capital Trust II Notes, due 2027, and provides a back-to-back guarantee to ING Group in respect of its guarantee of $218 million combined principal amount of Aetna Notes.
•Voya Financial, Inc. and Voya Holdings provide a guarantee of payment of obligations to certain subsidiaries under certain surplus notes held by those subsidiaries.
We did not recognize any asset or liability as of June 30, 2025 in relation to intercompany indemnifications, guarantees or support agreements. As of June 30, 2025, no guarantees existed in which we were required to currently perform under these arrangements.
Borrowings from Subsidiaries
We maintain revolving reciprocal loan agreements with a number of our life and non-life insurance subsidiaries that are used to fund short-term cash requirements that arise in the ordinary course of business. Under these agreements, either party may borrow up to the maximum allowable under the agreement for a term not more than 270 days. For life insurance subsidiaries, the amounts that either party may borrow under the agreement vary and are between 3% and 5% of the insurance subsidiary's statutory net admitted assets (excluding separate accounts) as of the previous year end depending on the state of domicile. As of June 30, 2025, the aggregate amount that may be borrowed or lent under agreements with life insurance subsidiaries was $1.4 billion. For non-life insurance subsidiaries, the maximum allowable under the agreement is based on the assets of the subsidiaries and their particular cash requirements. As of June 30, 2025, Voya Financial, Inc. had $463 million in outstanding borrowings from subsidiaries and had loaned $467 million to its subsidiaries.
Ratings
Our access to funding and our related cost of borrowing, collateral requirements for derivative instruments and the attractiveness of certain of our products to customers are affected by our credit ratings and insurance financial strength ratings, which are periodically reviewed by the rating agencies. Financial strength ratings and credit ratings are important factors affecting public confidence in an insurer and its competitive position in marketing products. Credit ratings are also important to our ability to raise capital through the issuance of debt and for the cost of such financing.
A downgrade in our credit ratings or the credit or financial strength ratings of our rated subsidiaries could have a material adverse effect on our results of operations and financial condition. See A downgrade or a potential downgrade in our financial strength or credit ratings may result in a loss of business and adversely affect our results of operations and financial conditionin Risk Factors in Part I, Item 1A. of our most current Annual Report on Form 10-K.
Financial strength ratings represent the opinions of rating agencies regarding the financial ability of an insurance company to meet its obligations under an insurance policy. Credit ratings represent the opinions of rating agencies regarding an entity's ability to repay its indebtedness. These ratings are not a recommendation to buy or hold any of our securities and they may be revised or revoked at any time at the sole discretion of the rating organization.
Rating agencies use an "outlook" statement for both industry sectors and individual companies. A stable outlook from rating agencies is an opinion generally indicating that the rating is not likely to change over the medium term.
The financial strength and credit ratings of Voya Financial, Inc. and its principal subsidiaries as of the date of this Quarterly Report on Form 10-Q are summarized in the following table.
| Rating Agency | ||||||||||||||||||||||||||
| A.M. Best | Fitch, Inc. | Moody's Investors Service, Inc. | Standard & Poor's | |||||||||||||||||||||||
|
("A.M. Best")(1)
|
("Fitch")(2)
|
("Moody's")(3)
|
("S&P")(4)
|
|||||||||||||||||||||||
| Long-term Issuer Credit Rating/Outlook: | ||||||||||||||||||||||||||
| Voya Financial, Inc. |
(5)
|
A-/stable
|
Baa2/stable | BBB+/stable | ||||||||||||||||||||||
| Financial Strength Rating/Outlook: | ||||||||||||||||||||||||||
|
Voya Retirement Insurance and Annuity Company
|
(5)
|
A+/stable
|
A2/stable | A+/stable | ||||||||||||||||||||||
|
ReliaStar Life Insurance Company
|
A/stable |
A+/stable
|
A2/stable | A+/stable | ||||||||||||||||||||||
| ReliaStar Life Insurance Company of New York | A/stable |
A+/stable
|
A2/stable | A+/stable | ||||||||||||||||||||||
(1)A.M. Best's financial strength ratings for insurance companies range from "A++ (superior)" to "s (suspended)." Long-term credit ratings range from "aaa (exceptional)" to "s (suspended)."
(2)Fitch's financial strength ratings for insurance companies range from "AAA (exceptionally strong)" to "C (distressed)." Long-term credit ratings range from "AAA (highest credit quality)," which denotes exceptionally strong capacity for timely payment of financial commitments, to "D (default)."
(3)Moody's financial strength ratings for insurance companies range from "Aaa (exceptional)" to "C (lowest)." Numeric modifiers are used to refer to the ranking within the group, with 1 being the highest and 3 being the lowest. These modifiers are used to indicate relative strength within a category. Long-term credit ratings range from "Aaa (highest)" to "C (default)."
(4)S&P's financial strength ratings for insurance companies range from "AAA (extremely strong)" to "D (default)." Long-term credit ratings range from "AAA (extremely strong)" to "D (default)."
(5)Effective April 11, 2019, A.M. Best withdrew, at the Company's request, its financial strength ratings with respect to Voya Financial, Inc. and Voya Retirement Insurance and Annuity Company.
On September 18, 2024, Fitch upgraded Voya Financial, Inc.'s life insurance subsidiaries' Insurer Financial Strength to A+ from A, long-term issuer default rating to A- from BBB+ and senior unsecured debt to BBB+ from BBB. In conjunction with the upgrade, Fitch revised its outlook to stable.
In December of 2024, Moody's confirmed its outlook for the U.S. life insurance sector as stable. Also, in December of 2024, A.M. Best maintained a stable outlook on the U.S. life insurance sector and Fitch changed its outlook from improving to stable for the North American life insurance sector.
Restrictions on Dividends and Returns of Capital from Subsidiaries
Our business is conducted through operating subsidiaries. U.S. insurance laws and regulations regulate the payment of dividends and other distributions by our U.S. insurance subsidiaries to their respective parents. These restrictions are based in part on the prior year's statutory income and surplus. In general, dividends up to specified levels are considered ordinary and may be paid without prior approval. Dividends in larger amounts, or "extraordinary" dividends, are subject to approval by the insurance commissioner of the state of domicile of the insurance subsidiary proposing to pay the dividend. In addition, under the insurance laws of our principal insurance subsidiaries domiciled in Connecticut and Minnesota (these insurance subsidiaries are referred to collectively as our "Principal Insurance Subsidiaries"), no dividend or other distribution exceeding an amount equal to an insurance company's earned surplus may be paid without the domiciliary insurance regulator's prior approval.
Our Principal Insurance Subsidiaries domiciled in Connecticut and Minnesota both have ordinary dividend capacity for 2025. Any extraordinary dividend payment would be subject to domiciliary insurance regulatory approval, which can be granted or withheld at the discretion of the regulator.
We may receive dividends from or contribute capital to our wholly owned non-life insurance subsidiaries such as broker-dealers, investment management entities and intermediate holding companies.
Insurance Subsidiaries - Dividends, Returns of Capital, and Capital Contributions
The following table summarizes dividends by each of the Company's Principal Insurance Subsidiaries to its parent for the periods indicated:
|
Dividends Paid(1)
|
||||||||||||||
| Six Months Ended June 30, | ||||||||||||||
| ($ in millions) | 2025 | 2024 | ||||||||||||
| Subsidiary Name (State of domicile): | ||||||||||||||
| Voya Retirement Insurance and Annuity Company ("VRIAC") (CT) | $ | 394 | $ | 473 | ||||||||||
| ReliaStar Life Insurance Company ("RLI") (MN) | - | 57 | ||||||||||||
(1) None of the dividends paid during the periods presented were considered extraordinary distributions.
Off-Balance Sheet Arrangements
Off-balance sheet arrangements are mostly related to commitments to either purchase or sell securities, mortgage loans or money market instruments, at a specified future date and at a specified price or yield. In addition, off-balance sheet arrangements include obligations to return non-cash collateral under our securities lending program. Non-cash collateral received in connection with the securities lending program may not be sold or re-pledged by our lending agent, except in the event of default. For information regarding off-balance sheet arrangements, see the Investments (excluding Consolidated Investment Entities)Note and the Commitments and ContingenciesNote in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.
Leverage Ratios
Our Leverage Ratios are a measure that we use to monitor the level of our debt relative to our total capitalization. The following table presents our leverage ratios for the periods indicated:
| June 30, | December 31, | ||||||||||
| ($ in millions) | 2025 | 2024 | |||||||||
| Financial Debt | |||||||||||
| Total financial debt | $ | 2,104 | $ | 2,502 | |||||||
|
Other financial obligations(1)
|
305 | 304 | |||||||||
| Total financial obligations | 2,409 | 2,806 | |||||||||
| Mezzanine equity | |||||||||||
|
Redeemable noncontrolling interest
|
215 | 219 | |||||||||
| Equity | |||||||||||
|
Preferred equity(2)
|
612 | 612 | |||||||||
| Common equity, excluding AOCI | 6,084 | 5,855 | |||||||||
| Total equity, excluding AOCI | 6,696 | 6,467 | |||||||||
| AOCI | (2,067) | (2,462) | |||||||||
| Total Voya Financial, Inc. shareholders' equity | 4,629 | 4,005 | |||||||||
| Noncontrolling interest | 1,709 | 1,783 | |||||||||
| Total shareholders' equity | $ | 6,338 | $ | 5,788 | |||||||
| Capital | |||||||||||
|
Capitalization(3)
|
$ | 6,733 | $ | 6,507 | |||||||
|
Adjusted capitalization excluding AOCI(4)
|
$ | 11,029 | $ | 11,275 | |||||||
| Leverage Ratios | |||||||||||
|
Debt-to-Capital Ratio(5)
|
31.2 | % | 38.5 | % | |||||||
|
Financial Leverage excluding AOCI(6)
|
27.4 | % | 30.3 | % | |||||||
(1)Includes operating leases, finance leases, and unfunded pension plan after-tax.
(2)Includes preferred stock par value and additional paid-in-capital.
(3)Includes Total Financial Debt and Total Voya Financial, Inc. Shareholders' Equity.
(4)Includes Total Financial Obligations, Mezzanine Equity and Total Shareholders' Equity excluding AOCI.
(5)Total Financial Debt divided by Capitalization.
(6)Total Financial Obligations and Preferred equity divided by Adjusted Capitalization excluding AOCI.
Our Financial Leverage Ratio, excluding AOCI, decreased from 30.3% at December 31, 2024 to 27.4% at June 30, 2025. This decrease was primarily due to the repayment at maturity of the $400 million outstanding principal amount of 3.976% Senior Notes on February 14, 2025, using the proceeds from the September 20, 2024 issuance of $400 million of unsecured 5.0% Senior Notes, due 2034.
Critical Accounting Judgments and Estimates
The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Critical estimates and assumptions are evaluated on an on-going basis based on historical developments, market conditions, industry trends and other information that is reasonable under the circumstances. There can be no assurance that actual results will conform to estimates and assumptions and that reported results of operations will not be materially affected by the need to make future accounting adjustments to reflect changes in these estimates and assumptions from time to time. Those estimates are inherently subject to change and actual results could differ from those estimates, and the differences may be material to the accompanying Condensed Consolidated Financial Statements.
In developing these accounting estimates, we make subjective and complex judgments that are inherently uncertain and subject to material changes as facts and circumstances develop. Although variability is inherent in these estimates, we believe that the amounts provided are appropriate based on the facts available upon preparation of the Condensed Consolidated Financial Statements.
For further information, refer to the critical accounting estimates described in the Business, Basis of Presentation and Significant Accounting PoliciesNote in our Consolidated Financial Statements in Part II, Item 8. of our Annual Report on Form 10-K.
As of June 30, 2025, there have been no material changes to the disclosures made in Critical Accounting Judgments and Estimatesin Part II. Item 7. of our Annual Report on Form 10-K.
Income Taxes
In August 2022, the Inflation Reduction Act of 2022 was signed into law, which includes a 15% corporate alternative minimum tax ("CAMT"). The CAMT is effective in taxable years beginning after December 31, 2022. In September 2024, the Department of Treasury issued proposed regulations providing additional guidance on the CAMT. While we do not expect to be subject to the CAMT for 2025, we are continuing to review the proposed regulations, and our CAMT determination will need to be evaluated in light of future guidance.
In July 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law, which includes changes to the Internal Revenue Code. We are still assessing, but do not anticipate that the OBBBA will result in a material impact to the financial statements.
See the Income TaxesNote to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for more information.
Investments (excluding Consolidated Investment Entities)
Investments for our general account are primarily managed by our wholly owned asset manager, Voya Investment Management LLC, pursuant to investment advisory agreements with affiliates. In addition, our internal treasury group manages our holding company liquidity investments, primarily money market funds. See Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7. of our Annual Report on Form 10-Kfor information on our investment strategy.
See the Investments (excluding Consolidated Investment Entities)Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for more information on investments. Additionally, see the Condensed Consolidated Balance Sheetsto our Condensed Consolidated Financial Statements Part I, Item 1. of this Quarterly Report on Form 10-Q for a composition of our investment portfolio.
Fixed Maturities Credit Quality - Ratings
For information regarding our fixed maturities credit quality ratings, see Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7. of our Annual Report on Form 10-K.
The following tables present credit quality of fixed maturities, including securities pledged, using NAIC designations as of the dates indicated:
| ($ in millions) | June 30, 2025 | ||||||||||||||||||||||||||||||||||||||||
| NAIC Quality Designation | 1 | 2 | 3 | 4 | 5 | 6 | Total Fair Value | ||||||||||||||||||||||||||||||||||
| U.S. Treasuries | $ | 546 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 546 | |||||||||||||||||||||||||||
| U.S. Government agencies and authorities | 31 | - | - | - | - | - | 31 | ||||||||||||||||||||||||||||||||||
| State, municipalities and political subdivisions | 482 | 31 | 3 | - | - | - | 516 | ||||||||||||||||||||||||||||||||||
| U.S. corporate public securities | 2,347 | 4,836 | 213 | 22 | - | - | 7,418 | ||||||||||||||||||||||||||||||||||
| U.S. corporate private securities | 2,322 | 2,648 | 346 | 65 | 7 | - | 5,388 | ||||||||||||||||||||||||||||||||||
|
Foreign corporate public securities and foreign governments(1)
|
769 | 1,597 | 160 | 34 | - | - | 2,560 | ||||||||||||||||||||||||||||||||||
|
Foreign corporate private securities(1)
|
489 | 2,220 | 134 | 8 | 41 | - | 2,892 | ||||||||||||||||||||||||||||||||||
| Residential mortgage-backed securities | 3,656 | 34 | 5 | 4 | 13 | 4 | 3,716 | ||||||||||||||||||||||||||||||||||
| Commercial mortgage-backed securities | 2,610 | 254 | 111 | 46 | 19 | - | 3,040 | ||||||||||||||||||||||||||||||||||
| Other asset-backed securities | 2,656 | 242 | 20 | 15 | 1 | 48 | 2,982 | ||||||||||||||||||||||||||||||||||
| Total fixed maturities | $ | 15,908 | $ | 11,862 | $ | 992 | $ | 194 | $ | 81 | $ | 52 | $ | 29,089 | |||||||||||||||||||||||||||
|
% of Fair Value
|
54.7% | 40.8% | 3.4% | 0.7% | 0.3% | 0.1% | 100.0% | ||||||||||||||||||||||||||||||||||
|
(1)Primarily U.S. dollar denominated.
|
|||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||
| NAIC Quality Designation | 1 | 2 | 3 | 4 | 5 | 6 | Total Fair Value | ||||||||||||||||||||||||||||||||||
| U.S. Treasuries | $ | 472 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 472 | |||||||||||||||||||||||||||
| U.S. Government agencies and authorities | 30 | - | - | - | - | - | 30 | ||||||||||||||||||||||||||||||||||
| State, municipalities and political subdivisions | 547 | 31 | 2 | - | - | - | 580 | ||||||||||||||||||||||||||||||||||
| U.S. corporate public securities | 2,207 | 4,603 | 165 | 16 | 17 | - | 7,008 | ||||||||||||||||||||||||||||||||||
| U.S. corporate private securities | 2,042 | 2,505 | 349 | 85 | 2 | - | 4,983 | ||||||||||||||||||||||||||||||||||
|
Foreign corporate public securities and foreign governments(1)
|
749 | 1,525 | 131 | 59 | 8 | - | 2,472 | ||||||||||||||||||||||||||||||||||
|
Foreign corporate private securities(1)
|
329 | 2,017 | 147 | - | 44 | - | 2,537 | ||||||||||||||||||||||||||||||||||
| Residential mortgage-backed securities | 3,418 | 29 | 5 | 4 | 8 | 7 | 3,471 | ||||||||||||||||||||||||||||||||||
| Commercial mortgage-backed securities | 2,570 | 386 | 107 | 48 | 21 | - | 3,132 | ||||||||||||||||||||||||||||||||||
| Other asset-backed securities | 2,460 | 256 | 8 | 12 | 1 | 32 | 2,769 | ||||||||||||||||||||||||||||||||||
| Total fixed maturities | $ | 14,824 | $ | 11,352 | $ | 914 | $ | 224 | $ | 101 | $ | 39 | $ | 27,454 | |||||||||||||||||||||||||||
| % of Fair Value | 54.0% | 41.3% | 3.3% | 0.8% | 0.4% | 0.2% | 100.0% | ||||||||||||||||||||||||||||||||||
|
(1)Primarily U.S. dollar denominated.
|
|||||||||||||||||||||||||||||||||||||||||
The following tables present credit quality of fixed maturities, including securities pledged, using NAIC acceptable rating organizations ("ARO") ratings as of the dates indicated:
| ($ in millions) | June 30, 2025 | ||||||||||||||||||||||||||||||||||
|
ARO Quality Ratings
|
AAA | AA | A | BBB | BB and Below | Total Fair Value | |||||||||||||||||||||||||||||
| U.S. Treasuries | $ | - | $ | 546 | $ | - | $ | - | $ | - | $ | 546 | |||||||||||||||||||||||
| U.S. Government agencies and authorities | - | 31 | - | - | - | 31 | |||||||||||||||||||||||||||||
| State, municipalities and political subdivisions | 22 | 292 | 168 | 31 | 3 | 516 | |||||||||||||||||||||||||||||
| U.S. corporate public securities | 18 | 319 | 2,152 | 4,701 | 228 | 7,418 | |||||||||||||||||||||||||||||
| U.S. corporate private securities | 22 | 325 | 1,873 | 2,656 | 512 | 5,388 | |||||||||||||||||||||||||||||
|
Foreign corporate public securities and foreign governments(1)
|
- | 112 | 704 | 1,548 | 196 | 2,560 | |||||||||||||||||||||||||||||
|
Foreign corporate private securities(1)
|
- | 37 | 426 | 2,247 | 182 | 2,892 | |||||||||||||||||||||||||||||
| Residential mortgage-backed securities | 1,338 | 2,194 | 3 | 24 | 157 | 3,716 | |||||||||||||||||||||||||||||
| Commercial mortgage-backed securities | 152 | 1,384 | 587 | 748 | 169 | 3,040 | |||||||||||||||||||||||||||||
| Other asset-backed securities | 489 | 622 | 1,534 | 237 | 100 | 2,982 | |||||||||||||||||||||||||||||
| Total fixed maturities | $ | 2,041 | $ | 5,862 | $ | 7,447 | $ | 12,192 | $ | 1,547 | $ | 29,089 | |||||||||||||||||||||||
| % of Fair Value | 7.0% | 20.2% | 25.6% | 41.9% | 5.3% | 100.0% | |||||||||||||||||||||||||||||
|
(1)Primarily U.S. dollar denominated.
|
|||||||||||||||||||||||||||||||||||
| ($ in millions) | December 31, 2024 | ||||||||||||||||||||||||||||||||||
|
ARO Quality Ratings
|
AAA | AA | A | BBB | BB and Below | Total Fair Value | |||||||||||||||||||||||||||||
| U.S. Treasuries | $ | - | $ | 472 | $ | - | $ | - | $ | - | $ | 472 | |||||||||||||||||||||||
| U.S. Government agencies and authorities | - | 30 | - | - | - | 30 | |||||||||||||||||||||||||||||
| State, municipalities and political subdivisions | 37 | 314 | 195 | 31 | 3 | 580 | |||||||||||||||||||||||||||||
| U.S. corporate public securities | 25 | 321 | 1,977 | 4,487 | 198 | 7,008 | |||||||||||||||||||||||||||||
| U.S. corporate private securities | 8 | 309 | 1,607 | 2,522 | 537 | 4,983 | |||||||||||||||||||||||||||||
|
Foreign corporate public securities and foreign governments(1)
|
- | 122 | 662 | 1,487 | 201 | 2,472 | |||||||||||||||||||||||||||||
|
Foreign corporate private securities(1)
|
- | 38 | 215 | 2,087 | 197 | 2,537 | |||||||||||||||||||||||||||||
| Residential mortgage-backed securities | 1,197 | 2,081 | 19 | 22 | 152 | 3,471 | |||||||||||||||||||||||||||||
| Commercial mortgage-backed securities | 214 | 1,276 | 631 | 829 | 182 | 3,132 | |||||||||||||||||||||||||||||
| Other asset-backed securities | 302 | 593 | 1,553 | 260 | 61 | 2,769 | |||||||||||||||||||||||||||||
| Total fixed maturities | $ | 1,783 | $ | 5,556 | $ | 6,859 | $ | 11,725 | $ | 1,531 | $ | 27,454 | |||||||||||||||||||||||
| % of Fair Value | 6.5 | % | 20.2 | % | 25.0 | % | 42.7 | % | 5.6 | % | 100.0 | % | |||||||||||||||||||||||
|
(1)Primarily U.S. dollar denominated.
|
|||||||||||||||||||||||||||||||||||
Fixed maturities rated BB and below may have speculative characteristics and changes in economic conditions or other circumstances that are more likely to lead to a weakened capacity of the issuer to make principal and interest payments than is the case with higher rated fixed maturities.
As of June 30, 2025 and December 31, 2024, we held fixed maturities rated BBB of $12.2 billion and $11.7 billion, respectively. Our higher allocation to BBB relative to industry peers is a function of our underweight to high yield debt and preference for private credit, which is primarily a BBB market. Private credit within the BBB space provides issuer diversification, offers a higher overall return profile, and includes stronger credit protections that come with better covenant structures.
Unrealized Capital Losses
As of June 30, 2025 and December 31, 2024, we held eight and nine fixed maturities with unrealized capital loss in excess of $10 million, respectively. As of June 30, 2025 and December 31, 2024, the unrealized capital losses on these fixed maturities equaled $86 million or 3.6% and $114 million or 4.0% of the total unrealized losses, respectively.
See the Investments (excluding Consolidated Investment Entities)Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for further information on unrealized capital losses.
CMO-B Portfolio
The following table presents fixed maturities balances held in the CMO-B portfolio by NAIC quality rating as of the dates indicated:
| ($ in millions) | June 30, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||
| NAIC Quality Designation | Amortized Cost | Fair Value | % Fair Value | Amortized Cost | Fair Value | % Fair Value | ||||||||||||||||||||||||||||||||
| 1 | $ | 1,736 | $ | 1,755 | 99.1 | % | $ | 1,708 | $ | 1,708 | 98.1 | % | ||||||||||||||||||||||||||
| 2 | - | - | - | % | 19 | 20 | 1.1 | % | ||||||||||||||||||||||||||||||
| 3 | - | - | - | % | - | - | - | % | ||||||||||||||||||||||||||||||
| 4 | 1 | 1 | 0.1 | % | - | 1 | 0.1 | % | ||||||||||||||||||||||||||||||
| 5 | 8 | 11 | 0.6 | % | 4 | 5 | 0.3 | % | ||||||||||||||||||||||||||||||
| 6 | 3 | 4 | 0.2 | % | 6 | 7 | 0.4 | % | ||||||||||||||||||||||||||||||
| Total | $ | 1,748 | $ | 1,771 | 100.0 | % | $ | 1,737 | $ | 1,741 | 100.0 | % | ||||||||||||||||||||||||||
For CMO securities where we elected the FVO, amortized cost represents the market values. For details on the NAIC designation methodology, see Fixed Maturities Credit Quality-Ratingsin Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7. of our Annual Report on Form 10-K.
The following table presents the notional amounts and fair values of interest rate derivatives not qualifying for hedge accounting and used in our CMO-B portfolio as of the dates indicated:
| June 30, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||
| ($ in millions) |
Notional
Amount
|
Asset Fair Value
|
Liability Fair Value
|
Notional
Amount
|
Asset Fair Value
|
Liability Fair Value
|
|||||||||||||||||||||||||||||
| Interest Rate Contracts | $ | 11,653 | $ | 87 | $ | 241 | $ | 11,669 | $ | 141 | $ | 271 | |||||||||||||||||||||||
The Company utilizes interest rate futures and interest rate swaps as a part of the CMO-B portfolio to hedge interest rate risk.
The following table presents our CMO-B fixed maturity securities balances and tranche type as of the dates indicated:
| ($ in millions) | June 30, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||
| Tranche Type | Amortized Cost | Fair Value | % Fair Value | Amortized Cost | Fair Value | % Fair Value | ||||||||||||||||||||||||||||||||
| Inverse Floater | $ | 206 | $ | 216 | 12.2 | % | $ | 196 | $ | 190 | 10.9 | % | ||||||||||||||||||||||||||
| Interest Only (IO) | 918 | 919 | 51.8 | % | 941 | 942 | 54.1 | % | ||||||||||||||||||||||||||||||
| Inverse IO | 457 | 465 | 26.3 | % | 411 | 414 | 23.8 | % | ||||||||||||||||||||||||||||||
| Principal Only (PO) | 71 | 72 | 4.1 | % | 57 | 57 | 3.3 | % | ||||||||||||||||||||||||||||||
| Floater | 4 | 4 | 0.2 | % | 4 | 4 | 0.2 | % | ||||||||||||||||||||||||||||||
| Agency Credit Risk Transfer | 90 | 93 | 5.3 | % | 114 | 119 | 6.8 | % | ||||||||||||||||||||||||||||||
| Other | 2 | 2 | 0.1 | % | 14 | 15 | 0.9 | % | ||||||||||||||||||||||||||||||
| Total | $ | 1,748 | $ | 1,771 | 100.0 | % | $ | 1,737 | $ | 1,741 | 100.0 | % | ||||||||||||||||||||||||||
During the six months ended June 30, 2025, the market value of our CMO-B securities portfolio was higher on a combination of transactional activity and valuation movements among tranche types.
The following table presents returns for our CMO-B portfolio for the periods indicated:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
|
Net investment income
|
$ | 71 | $ | 62 | $ | 143 | $ | 126 | |||||||||||||||
|
Net gains (losses)(1)
|
(33) | (3) | (58) | 16 | |||||||||||||||||||
|
Income before income taxes
|
$ | 38 | $ | 59 | $ | 85 | $ | 142 | |||||||||||||||
(1) Net gains (losses) also include derivatives interest settlements, mark to market adjustments and realized gains (losses) on standalone derivatives contracts that are in the CMO-B portfolio.
In defining the Adjusted operating earnings before income taxes for our CMO-B portfolio (including CMO-B portfolio income (loss) related to businesses to be exited through reinsurance or divestment) certain recharacterizations are recognized. The net coupon settlement on interest rate swaps hedging CMO-B securities that is included in Net gains (losses) is reflected. In addition, the premium amortization and change in fair value for securities designated under the FVO are included in Net gains (losses), whereas the coupon for these securities is included in Net investment income. In order to present the economics of these fair value securities in a similar manner to those of an available for sale security, the premium amortization is reclassified from Net gains (losses).
After adjusting for the two items referenced immediately above, the following table presents a reconciliation of Income (loss) before income taxes from our CMO-B portfolio to Adjusted operating earnings before income taxes from our CMO-B portfolio for the periods indicated:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Income (loss) before income taxes | $ | 38 | $ | 59 | $ | 85 | $ | 142 | |||||||||||||||
| Realized gains (losses) including impairment | - | - | (1) | - | |||||||||||||||||||
| Fair value adjustments | - | (15) | (9) | (49) | |||||||||||||||||||
| Total adjustments to income (loss) | - | (15) | (10) | (49) | |||||||||||||||||||
| Adjusted operating earnings before income taxes | $ | 37 | $ | 44 | $ | 74 | $ | 93 | |||||||||||||||
See Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7. of our Annual Report on Form 10-Kfor information on our CMO-B portfolio.
Structured Securities
Residential Mortgage-backed Securities
The following tables present our residential mortgage-backed securities as of the dates indicated:
| June 30, 2025 | |||||||||||||||||||||||||||||
| ($ in millions) | Amortized Cost | Gross Unrealized Capital Gains | Gross Unrealized Capital Losses | Embedded Derivatives | Fair Value | ||||||||||||||||||||||||
| Prime Agency | $ | 2,080 | $ | 22 | $ | 35 | $ | 1 | $ | 2,068 | |||||||||||||||||||
| Prime Non-Agency | 1,610 | 14 | 182 | 1 | 1,443 | ||||||||||||||||||||||||
| Alt-A | 155 | 3 | 4 | 1 | 155 | ||||||||||||||||||||||||
|
Sub-Prime(1)
|
58 | 2 | 2 | - | 58 | ||||||||||||||||||||||||
|
Total
|
$ | 3,903 | $ | 41 | $ | 223 | $ | 3 | $ | 3,724 | |||||||||||||||||||
|
(1)Includes subprime other asset backed securities.
|
|||||||||||||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||||||||
| ($ in millions) | Amortized Cost | Gross Unrealized Capital Gains | Gross Unrealized Capital Losses | Embedded Derivatives | Fair Value | ||||||||||||||||||||||||
| Prime Agency | $ | 2,026 | $ | 12 | $ | 51 | $ | (5) | $ | 1,982 | |||||||||||||||||||
| Prime Non-Agency | 1,625 | 12 | 208 | - | 1,429 | ||||||||||||||||||||||||
| Alt-A | 48 | 4 | 1 | 1 | 52 | ||||||||||||||||||||||||
|
Sub-Prime(1)
|
20 | 1 | 1 | - | 20 | ||||||||||||||||||||||||
| Total | $ | 3,719 | $ | 29 | $ | 261 | $ | (4) | $ | 3,483 | |||||||||||||||||||
|
(1) Includes subprime other asset backed securities.
|
|||||||||||||||||||||||||||||
Commercial Mortgage-backed Securities
The following tables present our commercial mortgage-backed securities by origination as of the dates indicated:
| June 30, 2025 | ||||||||||||||||||||||||||||||||||||||
| ($ in millions) | AAA | AA | A | BBB | BB and Below | Total | ||||||||||||||||||||||||||||||||
| Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||||||||||||||||||
| 2025 | $ | - | $ | - | $ | - | $ | - | $ | 10 | $ | 10 | $ | - | $ | - | $ | - | $ | - | $ | 10 | $ | 10 | ||||||||||||||
| 2024 | - | - | 3 | 3 | - | - | - | - | - | - | 3 | 3 | ||||||||||||||||||||||||||
| 2023 | - | - | - | - | 4 | 4 | - | - | - | - | 4 | 4 | ||||||||||||||||||||||||||
| 2022 | 21 | 21 | 99 | 74 | 108 | 104 | 74 | 71 | - | - | 302 | 270 | ||||||||||||||||||||||||||
| 2021 | 65 | 62 | 196 | 132 | 165 | 156 | 249 | 236 | 21 | 20 | 696 | 606 | ||||||||||||||||||||||||||
| Prior | 72 | 69 | 1,348 | 1,175 | 336 | 313 | 502 | 441 | 216 | 149 | 2,474 | 2,147 | ||||||||||||||||||||||||||
|
Total
|
$ | 158 | $ | 152 | $ | 1,646 | $ | 1,384 | $ | 623 | $ | 587 | $ | 825 | $ | 748 | $ | 237 | $ | 169 | $ | 3,489 | $ | 3,040 | ||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||||||||
| ($ in millions) | AAA | AA | A | BBB | BB and Below | Total | ||||||||||||||||||||||||||||||||
| Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||||||||||||||||||
| 2024 | $ | - | $ | - | $ | 3 | $ | 3 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 3 | $ | 3 | ||||||||||||||
| 2023 | - | - | 4 | 5 | 4 | 4 | - | - | - | - | 8 | 9 | ||||||||||||||||||||||||||
| 2022 | 22 | 21 | 112 | 85 | 109 | 106 | 93 | 90 | - | - | 336 | 302 | ||||||||||||||||||||||||||
| 2021 | 96 | 93 | 210 | 143 | 186 | 173 | 295 | 277 | 21 | 18 | 808 | 704 | ||||||||||||||||||||||||||
| 2020 | 27 | 26 | 40 | 31 | 62 | 53 | 109 | 94 | 24 | 5 | 262 | 209 | ||||||||||||||||||||||||||
| Prior | 84 | 74 | 1,201 | 1,009 | 320 | 295 | 433 | 368 | 222 | 159 | 2,260 | 1,905 | ||||||||||||||||||||||||||
|
Total
|
$ | 229 | $ | 214 | $ | 1,570 | $ | 1,276 | $ | 681 | $ | 631 | $ | 930 | $ | 829 | $ | 267 | $ | 182 | $ | 3,677 | $ | 3,132 | ||||||||||||||
As of June 30, 2025, 85.8% and 8.3% of CMBS investments were designated as NAIC-1 and NAIC-2, respectively. As of December 31, 2024, 82.0% and 12.4% of CMBS investments were designated as NAIC-1 and NAIC-2, respectively.
Other Asset-backed Securities
The following tables present our other asset-backed securities as of the dates indicated:
| June 30, 2025 | ||||||||||||||||||||||||||||||||||||||
| ($ in millions) | AAA | AA | A | BBB | BB and Below | Total | ||||||||||||||||||||||||||||||||
| Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||||||||||||||||||
| Collateralized Obligation | $ | 413 | $ | 417 | $ | 557 | $ | 562 | $ | 1,364 | $ | 1,379 | $ | 94 | $ | 95 | $ | 90 | $ | 74 | $ | 2,518 | $ | 2,527 | ||||||||||||||
| Auto-Loans | 5 | 5 | - | - | 3 | 3 | - | - | - | - | 8 | 8 | ||||||||||||||||||||||||||
| Student Loans | 2 | 2 | 60 | 57 | - | - | - | - | - | - | 62 | 59 | ||||||||||||||||||||||||||
| Credit Card loans | 4 | 4 | - | - | - | - | - | - | 2 | 2 | 6 | 6 | ||||||||||||||||||||||||||
| Other Loans | 67 | 61 | 2 | 2 | 162 | 152 | 142 | 139 | 20 | 20 | 393 | 374 | ||||||||||||||||||||||||||
|
Total(1)
|
$ | 491 | $ | 489 | $ | 619 | $ | 621 | $ | 1,529 | $ | 1,534 | $ | 236 | $ | 234 | $ | 112 | $ | 96 | $ | 2,987 | $ | 2,974 | ||||||||||||||
|
(1)Excludes subprime other asset backed securities.
|
||||||||||||||||||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||||||||
| ($ in millions) | AAA | AA | A | BBB | BB and Below | Total | ||||||||||||||||||||||||||||||||
| Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||||||||||||||||||
| Collateralized Obligation | $ | 225 | $ | 229 | $ | 528 | $ | 534 | $ | 1,410 | $ | 1,433 | $ | 123 | $ | 125 | $ | 68 | $ | 52 | $ | 2,354 | $ | 2,373 | ||||||||||||||
| Auto-Loans | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Student Loans | 5 | 4 | 61 | 56 | - | - | - | - | - | - | 66 | 60 | ||||||||||||||||||||||||||
| Credit Card loans | 9 | 9 | - | - | - | - | 2 | 2 | 2 | 2 | 13 | 13 | ||||||||||||||||||||||||||
| Other Loans | 67 | 60 | 2 | 2 | 132 | 120 | 135 | 129 | - | - | 336 | 311 | ||||||||||||||||||||||||||
|
Total(1)
|
$ | 306 | $ | 302 | $ | 591 | $ | 592 | $ | 1,542 | $ | 1,553 | $ | 260 | $ | 256 | $ | 70 | $ | 54 | $ | 2,769 | $ | 2,757 | ||||||||||||||
|
(1)Excludes subprime other asset backed securities.
|
||||||||||||||||||||||||||||||||||||||
As of June 30, 2025, 89.1% and 8.1% of Other ABS investments were designated as NAIC-1 and NAIC-2, respectively. As of December 31, 2024, 88.9% and 9.3% of Other ABS investments were designated as NAIC-1 and NAIC-2, respectively.
Mortgage Loans on Real Estate
As of June 30, 2025, our mortgage loans on real estate portfolio had a weighted average DSC of 2.37 times and a weighted average LTV ratio of 41.7%. As of December 31, 2024, our mortgage loans on real estate portfolio had a weighted average DSC of 2.03 times, and a weighted average LTV ratio of 43.4%. See the Investments (excluding Consolidated Investment Entities)Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for further information on mortgage loans on real estate.
Impairments
We evaluate available-for-sale fixed maturities for impairment on a regular basis. The assessment of whether impairments have occurred is based on a case-by-case evaluation of the underlying reasons for the decline in estimated fair value. See the Business, Basis of Presentation and Significant Accounting PoliciesNote in our Consolidated Financial Statements in Part II, Item 8. of our Annual Report on Form 10-Kfor the policy used to evaluate whether the investments are impaired. See the Investments (excluding Consolidated Investment Entities)Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for further information on impairment.
Derivatives
We use derivatives for a variety of hedging purposes. We also have embedded derivatives within fixed maturities instruments and certain product features. See the Business, Basis of Presentation and Significant Accounting PoliciesNote in our Consolidated Financial Statements in Part II, Item 8. of our Annual Report on Form 10-Kfor further information. See the
Derivative Financial InstrumentsNote to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for further information on derivatives.
European Exposures
We quantify and allocate our exposure to the region by attempting to identify aspects of the region or country risk to which we are exposed. Among the factors we consider are the nationality of the issuer, the nationality of the issuer's ultimate parent, the corporate and economic relationship between the issuer and its parent, as well as the political, legal and economic environment in which each functions. By undertaking this assessment, we believe that we develop a more accurate assessment of the actual geographic risk, with a more integrated understanding of contributing factors to the full risk profile of the issuer.
In the normal course of our ongoing risk and portfolio management process, we closely monitor compliance with a credit limit hierarchy designed to minimize overly concentrated risk exposures by geography, sector and issuer. This framework takes into account various factors such as internal and external ratings, capital efficiency and liquidity and is overseen by a combination of Investment and Corporate Risk Management, as well as insurance portfolio managers focused specifically on managing the investment risk embedded in our portfolio.
As of June 30, 2025, our total European exposure had an amortized cost and fair value of $2.5 billion and $2.4 billion, respectively. Some of the major country level exposures were in the United Kingdom of $1.0 billion, in The Netherlands of $258 million, in France of $228 million, in Germany of $172 million, in Switzerland of $83 million, in Ireland of $153 million and in Belgium of $40 million.
Consolidated and Nonconsolidated Investment Entities
We use many forms of entities to achieve our business objectives and we have participated in varying degrees in the design and formation of these entities. These entities are considered to be VIEs or VOEs (collectively, "Consolidated Investment Entities"), or nonconsolidated VIEs, and we evaluate our involvement with each entity to determine whether consolidation is required.
We perform a quarterly consolidation analysis to assess if the consolidation of a fund is required. The consolidation process brings on the assets, liabilities, noncontrolling interest and operations of the VIE and/or VOE into our financial statements.
If the fund no longer meets the criteria for consolidation, the assets, liabilities, noncontrolling interest and operations of the fund is removed from our financial statements. This process of consolidation/deconsolidation could have a material impact on Total shareholders' equity.
See Consolidation and Noncontrolling Interests and Fair Value Measurements in the Business, Basis of Presentation and Significant Accounting PoliciesNote to our Consolidated Financial Statements in Part II, Item 8. of our Annual Report on Form 10-K. Additionally, see the Consolidated and Nonconsolidated Investment EntitiesNote to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for more information.
Securitizations
We invest in various tranches of securitization entities, including RMBS, CMBS and ABS. Refer to the Consolidated and Nonconsolidated Investment EntitiesNote and Fair Value Measurements (excluding Consolidated Investment Entities)Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for an understanding over the Company's Securitizations. Refer to the Investments (excluding Consolidated Investment Entities)Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for details regarding the carrying amounts and classifications of these assets.
Guarantors and Issuers of Guaranteed Securities
Voya Financial, Inc. (the "Parent Issuer") has issued certain notes pursuant to transactions registered under the Securities Act of 1933. As of June 30, 2025, such securities consist of (i) the 3.65% senior notes due 2026, the 5.0% senior notes due 2034, the 5.7% senior notes due 2043, and the 4.8% senior notes due 2046, with an aggregate principal amount of $1.5 billion (collectively, the "Senior Notes") and (ii) the 4.7% fixed-to-floating junior subordinated notes due 2048, with principal amount of $336 million (the "Junior Subordinated Notes" and, together with the Senior Notes, the "Registered Notes"). As of December 31, 2024, such securities consist of (i) the 3.976% senior notes due 2025, which was repaid at maturity on February 14, 2025, the 3.65% senior notes due 2026, the 5.0% senior notes due 2034, the 5.7% senior notes due 2043, and the 4.8%
senior notes due 2046, with an aggregate principal amount of $1.9 billion and (ii) the 4.7% fixed-to-floating junior subordinated notes due 2048, with principal amount of $336 million.
Voya Holdings Inc. (the "Subsidiary Guarantor"), a wholly owned subsidiary of the Parent Issuer, has guaranteed each of the Registered Notes on a full and unconditional basis. No other subsidiary of the Parent Issuer has guaranteed any of the Registered Notes. The Parent Issuer and the Subsidiary Guarantor are hereby referred to below as the "Obligor Group."
The full and unconditional guarantees require the Subsidiary Guarantor to satisfy the obligations of the guaranteed security immediately, if and when the Parent Issuer has failed to make a scheduled payment thereunder. If the Subsidiary Guarantor does not make such payment, any holder of the guaranteed security may immediately bring suit directly against the Subsidiary Guarantor for payment of amounts due and payable.
Set forth below is summarized financial information of the Obligor Group, as presented on a combined basis. Inter-combination transactions and balances within the Obligor Group have been eliminated. In addition, financial information of any non-issuer or non-guarantor subsidiaries, which would normally be consolidated by either the Parent Issuer or the Subsidiary Guarantor under U.S. generally accepted accounting principles, has been excluded from such presentation.
Refer to the Summarized Financial Information of the Obligor Group for the periods indicated:
| As of and for the | |||||||||||
|
($ in millions)
|
Six Months Ended June 30, 2025 | Year Ended December 31, 2024 | |||||||||
| Summarized Statements of Operations Information: | |||||||||||
| Total revenues | $ | 34 | $ | 57 | |||||||
| Total benefits and expenses | 113 | 171 | |||||||||
| Income (loss), net of tax | (77) | (96) | |||||||||
| Net income (loss) before equity in earnings (losses) of unconsolidated affiliates | (77) | (96) | |||||||||
| Net income (loss) available to Obligor Group | (77) | (96) | |||||||||
| Summarized Balance Sheets Information: | |||||||||||
| Total investments | 100 | 44 | |||||||||
| Cash and cash equivalents | 149 | 217 | |||||||||
|
Deferred income taxes
|
850 | 863 | |||||||||
| Goodwill | 94 | 94 | |||||||||
| Loans to non-obligated subsidiaries | 465 | 387 | |||||||||
| Due from non-obligated subsidiaries | 4 | - | |||||||||
| Total assets | 1,680 | 1,612 | |||||||||
| Short-term debt with non-obligated subsidiaries | 463 | 176 | |||||||||
| Due to non-obligated subsidiaries | 5 | 11 | |||||||||
|
Short-term debt
|
446 | 399 | |||||||||
| Long-term debt | 1,657 | 2,103 | |||||||||
| Total liabilities | $ | 2,837 | $ | 2,852 | |||||||
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the risk that our consolidated financial position and results of operations will be affected by fluctuations in the value of financial instruments. We have significant holdings in financial instruments and are naturally exposed to a variety of market risks. The main market risks we are exposed to include interest rate risk, equity market price risk and credit risk. We do not have material market risk exposure to "trading" activities in our Condensed Consolidated Financial Statements. For further details on these market risks, see Quantitative and Qualitative Disclosures About Market Riskin Part II, Item 7A. of our Annual Report on Form 10-K.
Market Risk Related to Interest Rates
We assess interest rate exposures for financial assets, liabilities and derivatives using hypothetical test scenarios that assume either increasing or decreasing 100 basis point parallel shifts in the yield curve. In calculating these amounts, we exclude gains and losses on separate account fixed income securities related to products for which the investment risk is borne primarily by the separate account contract holder rather than by us. While the test scenarios are for illustrative purposes only and do not reflect our expectations regarding future interest rates or the performance of fixed income markets, they are near-term, reasonably possible hypothetical changes that illustrate the potential impact of such events. These tests do not measure the change in value that could result from non-parallel shifts in the yield curve. As a result, the actual change in fair value from a 100 basis point change in interest rates could be different from that indicated by these calculations.
The following table summarizes the net estimated potential change in fair value from hypothetical 100 basis point upward and downward shifts in interest rates as of June 30, 2025:
|
Hypothetical Change in
Fair Value(2)
|
|||||||||||||||||||||||
| ($ in millions) | Notional |
Fair Value(1)
|
+ 100 Basis Points Yield Curve Shift | - 100 Basis Points Yield Curve Shift | |||||||||||||||||||
| Financial assets with interest rate risk: | |||||||||||||||||||||||
| Fixed maturity securities, including securities pledged | $ | - | $ | 29,089 | $ | (1,703) | $ | 1,884 | |||||||||||||||
| Mortgage loans on real estate | - | 5,379 | (162) | 177 | |||||||||||||||||||
| Financial liabilities with interest rate risk: | |||||||||||||||||||||||
| Investment contracts: | |||||||||||||||||||||||
|
Funding agreements without fixed maturities and deferred annuities(3)
|
- | 37,494 | (1,683) | 2,044 | |||||||||||||||||||
| Funding agreements with fixed maturities | - | 1,405 | - | - | |||||||||||||||||||
| Supplementary contracts and immediate annuities | - | 488 | (35) | 7 | |||||||||||||||||||
| Derivatives: | |||||||||||||||||||||||
| Interest rate contracts | 14,728 | 94 | 155 | (182) | |||||||||||||||||||
| Long-term debt | - | 1,612 | (78) | 85 | |||||||||||||||||||
| Stabilizer and MCGs | - | 13 | 17 | (2) | |||||||||||||||||||
|
Embedded derivatives within reinsurance
|
- | (30) | 22 | (25) | |||||||||||||||||||
(1) Separate account assets and liabilities, which are interest rate sensitive, are not included herein as any interest rate risk is borne by the holder of separate account.
(2) Increases in assets and liabilities are presented without parentheses while (decreases) in assets and liabilities are presented with parentheses.
(3) Certain amounts included in Funding agreements without fixed maturities and deferred annuities are also reflected within Stabilizer and MCGs.
Market Risk Related to Equity Market Prices
We assess equity risk exposures for financial assets, liabilities and derivatives using hypothetical test scenarios that assume either an increase or decrease of 10% in all equity market benchmark levels. In calculating these amounts, we exclude gains and losses on separate account equity securities related to products for which the investment risk is borne primarily by the separate account contract holder rather than by us. While the test scenarios are for illustrative purposes only and do not reflect our expectations regarding the future performance of equity markets, they are near-term, reasonably possible hypothetical changes that illustrate the potential impact of such events. These scenarios consider only the direct effect on fair value of declines in equity benchmark market levels and not changes in asset-based fees recognized as revenue or changes in any other assumptions such as market volatility or mortality, utilization or persistency rates in insurance contracts. In addition, these scenarios do not reflect the effect of basis risk, such as potential differences in the performance of the investment funds underlying the variable annuity products relative to the equity market benchmark we use as a basis for developing our hedging strategy. The impact of basis risk could result in larger differences between the change in fair value of the equity-based derivatives and the related living benefit features, in comparison to the hypothetical test scenarios.
The following table summarizes the net estimated potential change in fair value from an instantaneous increase and decrease in all equity market benchmark levels of 10% as of June 30, 2025:
|
Hypothetical Change in
Fair Value(1)
|
|||||||||||||||||||||||
| ($ in millions) | Notional | Fair Value |
+ 10% Equity Shock |
-10% Equity Shock |
|||||||||||||||||||
| Financial assets with equity market risk: | |||||||||||||||||||||||
| Equity securities, at fair value | $ | - | $ | 210 | $ | 21 | $ | (21) | |||||||||||||||
|
Limited partnerships/corporations
|
- | 1,970 | 118 | (118) | |||||||||||||||||||
| Derivatives: | |||||||||||||||||||||||
| Equity futures and total return swaps | 249 | 5 | 20 | (20) | |||||||||||||||||||
| Equity options | 35 | 1 | - | - | |||||||||||||||||||
(1)Increases in assets and liabilities are presented without parentheses while (decreases) in assets and liabilities are presented with parentheses.
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