Voya Financial (NYSE:VOYA) reported third-quarter adjusted operating earnings of $240 million, or $2.60 per diluted share, up 6% from a year earlier as growth in Retirement and Investment Management and improving Employee Benefits margins offset severance costs and lower investment capital income.
Chief Executive Officer Heather Lavallee said the company was delivering on its commitment to a strong second half of 2026. “Commercial strength across the businesses drove fee revenue growth in Retirement and Investment Management, while continued improvements in Employee Benefits strengthened margins and cash generation,” she said.
Results included about $25 million of pre-tax severance expense tied to efficiency initiatives. Chief Financial Officer Mike Katz said adjusted operating earnings per share increased more than 14% excluding severance, supported by business performance and share repurchases. The company said the cost actions are expected to benefit its expense base beginning in the first quarter and into 2027.
Capital generation and shareholder returns
Voya generated approximately $225 million of excess capital during the quarter, equal to 95% of after-tax adjusted operating earnings. The company returned roughly $150 million to shareholders through dividends and share repurchases during the period.
The board raised Voya’s quarterly common dividend 21% to $0.57 per share and added $500 million to its repurchase authorization. Voya repurchased $100 million of stock in the third quarter and $400 million year to date, with an additional $150 million of repurchases expected in the fourth quarter.
Katz said share repurchases since the end of 2022 have reduced the company’s diluted share count by about 14%. Voya expects to generate more than $800 million of excess capital for full-year 2026, despite approximately $70 million of year-to-date severance charges, and expects free cash flow conversion to meet or exceed its 90% target.
The company ended the quarter with approximately $250 million of excess capital. Its trailing 12-month adjusted operating return on equity was 16.3%, with management expecting additional improvement in the fourth quarter.
Retirement segment supported by flows and fee revenue
Voya’s Retirement segment generated $266 million in adjusted operating earnings during the quarter and $920 million over the trailing 12 months. Trailing 12-month results included a $35 million headwind from alternative investment income, according to Katz.
Fee-based revenue in Retirement rose 12% over the trailing 12 months and represented more than 60% of total revenue. The segment’s operating margin was approximately 38%.
Defined contribution net flows totaled nearly $14 billion in the quarter, aided by a large plan implementation. Katz cautioned that large implementations are episodic and that Voya does not expect a similar contribution in the fourth quarter. Still, the company said it remains on track for a fifth consecutive year of positive net flows and expects positive organic net flows for 2026.
Jay Kaduson, CEO of Workplace Solutions, said full-service business experienced outflows consistent with broader industry trends and the completion of certain OneAmerica-related outflows. However, he emphasized other operating measures, including 98% plan retention, participant accounts that rose more than 5% year over year to more than 10 million, and trailing 12-month operating revenue growth of 6%.
Lavallee said the company continues to invest in wealth management, which it views as an opportunity to provide advice and investment solutions to retirement participants. Management also cited sales momentum across its target markets, including expected 2026 sales growth of 15% in emerging markets, 20% in the mid-market, and more than 50% in government markets.
Investment Management sees client demand, though earnings decline
Investment Management posted quarterly adjusted operating earnings of $58 million, down from $62 million a year earlier, primarily due to a $7 million reduction in investment capital income. The segment’s operating margin was 28.6%.
Institutional clients contributed $870 million in net inflows during the quarter, bringing the total to more than $3.5 billion over the past year. Katz said insurance client demand for private fixed-income capabilities remained strong, while international retail clients showed demand for income-oriented strategies.
Retail results included the previously disclosed wind-down of a legacy sub-advisory relationship, which resulted in a $5 billion impact. Matt Toms, CEO of Investment Management, said the lost business represented roughly $15 million of annualized revenue at a full run rate, though management expects it can continue to grow the broader business.
Toms said more than 80% of assets outperformed benchmarks over the three-year period. He attributed softer one-year investment performance partly to a rising-yield environment, fixed-income duration sensitivity, equity-market rotation, and underperformance in convertible assets.
Employee Benefits margins improve as Stop Loss results develop
Employee Benefits reported third-quarter adjusted operating earnings of $51 million, including a $12 million net favorable impact from annual actuarial assumption updates and $5 million of favorable Stop Loss development. Trailing 12-month earnings more than doubled to $126 million.
Excluding assumption updates, the Group Life loss ratio was approximately 71%, reflecting favorable mortality, while Supplemental Health’s loss ratio was 54%, in line with management expectations. Katz said the broader voluntary, disability and other category had a 59% loss ratio after adjusting for the assumption update, with the difference largely reflecting higher short-term disability loss ratios and one-time legacy universal life impacts.
Management highlighted continued progress in Stop Loss, where Voya has been pursuing disciplined pricing, underwriting and risk selection. Claims experience for the 2026 book through October was favorable relative to 2024 and 2025, while reserves remained at the high end of the company’s best-estimate range.
Katz said Voya had reduced Stop Loss premium by 15% for the 2025 book while seeking rate increases of about 21%, then obtained 24% rate increases for the 2026 book while keeping premium relatively flat. For the January 2027 selling season, the company said it is seeing further opportunities for meaningful rate increases and greater selectivity as request-for-proposal activity rises.
Lavallee said Voya remains committed to Stop Loss as a strategic business, citing client demand and its relationships with consultants. The company continues to target a 77% to 80% loss ratio range.
Looking ahead, management said it expects fourth-quarter and 2027 earnings and cash flow to be supported by business performance, expense management, continued margin improvement in Employee Benefits and disciplined capital deployment.
About Voya Financial (NYSE:VOYA)
Voya Financial, Inc is a U.S.-based financial services company that helps individuals, employers and institutions plan for retirement, manage investments and address employee benefit needs. Its businesses are organized primarily around Retirement, Employee Benefits and Investment Management.
Voya’s retirement business provides workplace retirement plans, including defined contribution and defined benefit solutions, as well as individual retirement products and advisory services. Its employee benefits operations offer products such as health, life, disability and supplemental insurance, along with benefits administration and related services for employers and their workers.
Through its investment management business, Voya provides institutional and individual investors with asset-management and advisory capabilities across a range of investment strategies.
