Voya Financial NYSE: VOYA reported second-quarter adjusted operating earnings of $140 million, or $1.51 per diluted share, as lower-than-expected alternative investment performance and severance costs weighed on results. The company said underlying trends in its Retirement, Investment Management and Employee Benefits businesses remained positive and supported expectations for higher earnings and cash generation in the second half of 2026.
Chief Executive Officer Heather Lavallee said Voya generated about $150 million of excess capital during the quarter and returned roughly $200 million to shareholders through repurchases and dividends. For the first half of the year, the company returned more than $380 million to shareholders.
Chief Financial Officer Mike Katz said quarterly earnings included an approximately $0.90-per-share effect from weaker alternative investment performance and severance actions. Alternative investment results were primarily affected by macroeconomic conditions in Voya's private-equity portfolio, whose results are reported with a one-quarter lag. Katz said year-to-date alternative investment returns remained positive and that the company expects improvement in the third quarter.
The severance actions are intended to reduce the company's expense base, with expected savings fully offsetting upfront costs by year-end, Katz said. Voya views the measures as a reset of its expense baseline heading into 2027 and said it remains focused on operating leverage and self-funding growth investments.
Retirement business posts strong defined-contribution flows
Voya's Retirement segment generated adjusted operating earnings of $190 million in the quarter. Results were affected by lower spread income tied to alternative investment performance, although core spread income remained resilient due to reinvestment at higher rates, according to Katz.
Fee-based revenue in Retirement rose 10% from a year earlier and accounted for more than 60% of segment revenue, while margins were 38%. Defined-contribution net inflows totaled $8.1 billion, supported by client retention and large plan implementations in government and corporate markets.
Lavallee said the company added more than $30 billion in assets and approximately 1 million participants through organic growth in government markets over the past 18 months. Voya's Retirement platform now serves more than 10 million participant accounts.
Jay Kaduson, CEO of Workplace Solutions, said request-for-proposal volumes increased by roughly 6% to 7% in emerging markets and rose by double digits in the mid-market segment. Volumes in large and mega plans were growing at a low-single-digit pace but remained healthy, he said.
Voya completed the final phase of its OneAmerica integration during the quarter. Management said the transaction added capabilities, distribution opportunities and strategic relationships, including in ESOPs, self-directed accounts and tax-exempt offerings. The company expects OneAmerica-related outflows to moderate in the second half.
Investment Management earnings rise, though legacy runoff remains a headwind
Investment Management adjusted operating earnings increased 12% year over year to $57 million, driven by higher advisory fees across institutional and retail channels. The segment recorded $1.2 billion in quarterly net inflows and $6.3 billion over the past 12 months.
Matt Toms, CEO of Investment Management, said institutional flows totaled $1.6 billion during the quarter, with demand supported by fixed-income and private-credit capabilities, particularly among insurance clients. He said the business was also seeing positive momentum in U.S. retail fixed income and specialty equity products, including small-cap growth.
Retail results were moderated by redemptions outside the U.S., which Toms attributed to market volatility and macroeconomic uncertainty. He said sales levels remained strong and management expects redemption activity to moderate in the second half.
Voya said 83% of Investment Management assets outperformed peers or benchmarks over three years, while 85% outperformed over 10 years. The segment will face a modest headwind from the wind-down of a legacy subadvisory relationship in the second half, though management said the revenue effect in 2026 is expected to be immaterial.
Toms said Voya continues to view 2% organic growth as an appropriate long-term target for Investment Management, while noting that performance can vary from period to period. Advisory revenue was up 8% year over year, he said.
Employee Benefits margins show improvement
Employee Benefits adjusted operating earnings were $22 million in the second quarter and $122 million over the trailing 12 months. Voya released $8 million of stop-loss reserves while continuing to hold reserves at the high end of its best-estimate range.
Management said early claims experience for 2026 stop-loss business was favorable compared with the 2024 and 2025 cohorts. Lavallee said Voya was seeing both fewer high-severity claims and lower claim frequency. Katz said the company was about 15% to 20% through the development cycle for its 2026 business at the end of the second quarter and would more likely reassess its 2026 stop-loss loss-ratio outlook in the fourth quarter than the third.
Voya has cited rate increases of 21% entering 2025 and 24% entering 2026, and management said it is receiving even more rate in current pricing activity. The company said it is pricing business to restore stop-loss margins to targeted levels in 2027.
Aggregate Employee Benefits loss ratios improved five points over the past 12 months, Katz said. In Group Life, favorable mortality trends offset elevated voluntary loss ratios. He said unusual billing true-ups and reserve adjustments added about 2.5 points to voluntary loss ratios in the quarter; a more normalized range would be around 54% for the second half.
Management also highlighted continuing growth in voluntary benefits, where trailing-12-month sales increased 7%, and said 48% of new Life, Absence and Disability cases through the second quarter were bundled with supplemental health products, up from 42% a year earlier.
Capital generation and wealth-management expansion
Voya generated $350 million of excess capital year to date and said quarterly cash conversion exceeded 100%. The company expects 2026 cash generation to exceed 2025 levels, supported by earnings momentum, cost actions and Employee Benefits margin improvement.
The company repurchased $150 million of stock during the second quarter and $300 million year to date, ending the period with about $200 million of excess capital. Voya expects to deploy at least $100 million toward share repurchases in the third quarter.
Management also pointed to growth in Wealth Management, where revenue rose approximately 12% year over year and assets under management totaled about $33 billion, up 16%. Kaduson said Voya had more than 650 advisors, representing a 20% increase year to date, as the company expands advice and guidance offerings for retirement-plan participants.
About Voya Financial (NYSE:VOYA)
Voya Financial, Inc NYSE: VOYA is a financial services company headquartered in New York City, focused on helping Americans plan, invest and protect their savings. The company traces its roots to the U.S. operations of ING Group, which were spun off in 2013 and rebranded as Voya Financial in 2014. Voya's operations are built around a customer-centric approach, drawing on decades of experience in retirement planning and risk management to serve both individual and institutional clients.
Voya's core business activities span three key segments: Retirement, Investment Management and Employee Benefits.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
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