Voya Financial, Inc. Stock

Good morning. Welcome to Voya Financial's Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference call over to Mei Ni Chu, Head of Investor Relations. Please go ahead.

Good morning, and thank you for joining today's call. We will begin with prepared remarks by Heather Lavallee, our Chief Executive Officer; and Mike Katz, our Chief Financial Officer. Following the prepared remarks, we will take your questions.

Also joining the call are Jay Kaduson, CEO of Workplace Solutions; and Matt toms, CEO of Investment Management.

As a reminder, materials for today's call are available on our website at investors.voya.com.

As noted on Slide 2 of our analyst presentation, some of the comments during today's discussion may contain forward-looking statements and refer to certain non-GAAP financial measures within the meaning of federal securities laws. GAAP reconciliations are available in our press release and financial supplement found on the Investor Relations website.

And now I will turn the call over to Heather.

Thank you, Mei Ni. Good morning, and thank you for joining us today. Let's turn to Page 4. We said we would deliver a strong second half and our third quarter results demonstrate that we are delivering on that commitment. Adjusted operating earnings per share were $2.60, up 6% year-over-year. Commercial strength across the businesses drove fee revenue growth in Retirement and Investment Management, while continued improvements in employee benefits strengthen margins and cash generation. At the same time, we've taken deliberate steps to reshape our cost base and translate growth into stronger earnings, reinforcing our confidence as we enter the fourth quarter.

Our third quarter results include additional severance costs tied to these actions. Beginning in the first quarter and into 2027, they will benefit our expense base, strengthen operating leverage and support continued growth across the business.

We generated $225 million of excess capital this quarter, representing 95% of after-tax adjusted operating earnings. During the quarter, we returned approximately $150 million to shareholders through dividends and share repurchases. We also increased our dividend by 21%.

Let me turn to the business highlights. Across our businesses, we are delivering for our customers and executing on the strategic priorities that will drive future growth. Investments in automation and client experience alongside disciplined expense management, are helping us to maintain and improve margins while growing the top line.

Retirement is a scaled, high-margin, increasingly fee-based franchise that continues to strengthen its leadership position. We continue to see strong sales momentum across our target markets. Within full service, we are on pace to achieve sales growth of 15% in emerging markets, 20% in the mid-market and more than 50% in government markets in 2026. And this quarter, we added nearly $14 billion of defined contributions net inflows and remain on track for a fifth consecutive year of positive net flows.

In addition to winning new business, we retained nearly 98% of our plans in the third quarter, and our average client tenure exceeds 15 years. Importantly, these results demonstrate the breadth of our growth. We're winning across employer segments, retaining clients and generating substantial net inflows, while creating more opportunities to connect our 10.3 million retirement participant accounts with advice and investment solutions through wealth management.

We continue to generate strong commercial momentum and results in investment management. We're winning assets at attractive yields that together build scale and support robust fee revenue trends. Our institutional channel remains a key driver of growth, with strong demand from insurance clients for private fixed income capabilities. Year-to-date, the channel has generated $2.9 billion in net inflows.

We're also seeing robust international retail flows into higher fee income-oriented solutions. Our access to international distribution remains an important competitive advantage. Overall, the fundamentals of the business remain strong. We continue to see client demand in markets where our capabilities are most differentiated and expense discipline is helping us sustain healthy operating margins as we continue to broaden our offering.

In Employee Benefits, the steps we have taken on pricing, underwriting and risk selection are driving margin improvement and increasing our confidence in further earnings growth. Stop Loss is a clear example of that progress. Over the past 2 years, we have taken decisive actions to improve the quality and consistency of the business, including disciplined pricing and greater selectivity in our underwriting. Those actions, together with the focused execution of our team have directly contributed to improving loss ratios and more consistent margins in the 2026 book of business.

Stop Loss demand remains strong as employers look for greater certainty around their health care costs. At the same time, current market dynamics support disciplined pricing and enable us to remain selective in our underwriting.

We see significant value in restoring profitability and building a more consistent earnings foundation, and we remain focused on returning loss ratios to the 77% to 80% target range. These results reinforce our confidence in the fourth quarter and in the earnings trajectory of the company.

I'll now turn it over to Mike to walk through the financial results in more detail.

Thank you, Heather. Turning to Slide 6. This quarter demonstrates how strong business performance and continued productivity improvement are translating into earnings growth, robust cash generation and greater capital flexibility.

Third quarter adjusted operating earnings were $240 million, or $2.60 per diluted share. Adjusted operating earnings per share increased 6% year-over-year or more than 14% excluding severance, driven by business performance and active share repurchases.

We generated approximately $225 million of excess capital in the quarter. Our fourth quarter and 2027 earnings and cash flow outlook remains supported by business performance, expense management and disciplined capital deployment.

We are executing the efficiency work already underway across the enterprise to improve operating performance, while aligning resources with our strategic priorities. Results this quarter include approximately $25 million of pretax severance expense associated with these actions.

As we guided last quarter, second half expenses are down meaningfully, and we now expect retirement and employee benefit administrative expenses to be in the lower half of our guidance range. These actions are creating a more efficient cost structure while preserving capacity to reinvest in the business.

Alternative investment returns were in line with our long-term expectations this quarter, benefiting from the timing of real estate gains. While we expect alternative investment returns to moderate in the near term, our sensitivity to alternatives is declining over time. And importantly, our overall earnings outlook remains strong.

With that, let me turn to the segment results. Retirement benefits from scale and a growing fee base, supporting durable cash generation. In the quarter, we generated $266 million of adjusted operating earnings and $920 million over the last 12 months, both above the comparable prior year period.

Trailing 12-month earnings include a $35 million alternative investment income headwind, dampening otherwise strong underlying revenue and earnings growth tied to commercial momentum.

Our fee-based revenues increased 12% over the trailing 12 months and now represent more than 60% of revenue.

Operating margin was approximately 38%, reflecting our ability to create operating leverage while reinvesting in the business.

We drove strong commercial momentum in the quarter with solid sales, high plan retention and participant accounts up 5% year-over-year. Defined contribution also benefited from a large plan implementation, which drove nearly $14 billion of net flows in the quarter. Large plan implementations are episodic, and we do not expect a similar contribution in the fourth quarter. As we communicated at the start of the year, we still expect positive organic net flows for 2026 with overall commercial momentum supporting revenue growth.

Overall, our scale, commercial momentum and expense discipline position Retirement for continued profitable growth.

Turning to Investment Management on Slide 8. Investment Management is demonstrating the durability of the franchise with fee growth, healthy client demand and strong long-term investment performance. Quarterly earnings were $58 million compared with $62 million in the prior year period, primarily reflecting a $7 million reduction in investment capital income. The quality of our asset mix continued to support fee-based revenue growth with operating margin at 28.6%.

We generated commercial momentum across institutional, insurance and international channels in the third quarter. Specifically, we attracted institutional client net inflows of $870 million in the quarter, contributing to over $3.5 billion over the last year as insurance client demand for private fixed income capabilities remained high.

In retail, demand for our income-oriented solutions improved, particularly from international clients. As mentioned last quarter, retail included impacts from the wind-down of a legacy relationship. That was a $5 billion impact, which modestly offset momentum in actively distributed products with a near-term revenue impact that is manageable.

Our long-term investment performance remains strong with more than 80% of assets outperforming benchmarks over the 3-year period.

Fee trends, healthy client demand and long-term investment performance position the business for continued earnings momentum.

Turning to Employee Benefits on Slide 9. Our focus on Employee Benefits remains on improving margins through disciplined pricing and underwriting. Growing fee revenue from benefit administration and a more efficient cost structure are also strengthening the underlying business. Third quarter adjusted operating earnings were $51 million, including a $12 million net favorable impact from our annual actuarial assumption update, and $5 million of favorable development in Stop Loss.

For comparison, the prior year quarter included $6 million of favorable assumption updates and a $12 million Stop Loss reinsurance recovery. On a trailing 12-month basis, earnings more than doubled to $126 million.

The assumption update also affected reported product loss ratios. Excluding the assumption impacts, the group life loss ratio was approximately 71%, reflecting favorable mortality, while supplemental health was 54%, consistent with expectations.

As a reminder, supplemental health is a component of the broader reported voluntary, disability and other loss ratio.

In Stop Loss, the favorable reserve development reflects better-than-expected claims experience on our 2025 book. For the 2026 book, claims through October remained favorable relative to both 2024 and 2025, while reserves remain at the high end of our best estimate range. This is encouraging, although the experience is still developing.

For the January 2027 season, favorable market dynamics are supporting further meaningful rate increases while higher RFP activity gives us greater opportunity to be selective and write business that meets our return targets. Taken together, our pricing and underwriting actions, improving claims experience and more efficient cost structure support our fourth quarter outlook and position employee benefits for further margin improvement and earnings growth in 2027.

Turning to Slide 10. Strong earnings and cash generation are supporting our balance sheet and providing significant flexibility to invest for growth and return capital to shareholders. We expect to generate more than $800 million of excess capital in 2026 despite absorbing approximately $70 million of severance charges year-to-date. We expect free cash flow conversion to be at or above our 90% target. Our 16.3% trailing 12-month adjusted operating return on equity reflects strong returns through the third quarter, and we expect further improvement in the fourth quarter.

Through the third quarter, we generated approximately $575 million of excess capital and returned the majority to shareholders.

We ended the quarter with approximately $250 million of excess capital.

That brings me how to we are deploying that capital on Slide 11. Our cash generation supports our ability to invest in the business, maintain financial flexibility and return excess capital to shareholders. We repurchased $100 million of shares in the third quarter and $400 million year-to-date and expect to repurchase an additional $150 million of shares in the fourth quarter.

Since year-end 2022, these repurchases have reduced our diluted share count by approximately 14%, providing a meaningful benefit to per share results.

At the same time, the Board approved an increase in the quarterly common dividend by 21% to $0.57 per share, reflecting confidence in our earnings and cash generation. The Board also added $500 million to our share repurchase authorization, giving us capacity to continue returning excess capital.

And finally, we made the remaining payment for OneAmerica after successfully completing the integration during the second quarter. The acquisition added meaningful scale, expanded our capabilities and created significant value for shareholders.

We entered the final quarter of 2026 with a stronger earnings base and significant financial flexibility, providing a solid foundation for continued growth in 2027. Our priorities are clear: deliver profitable growth, invest with discipline and return excess capital to shareholders.

With that, I'll turn it back to Heather.

Thanks, Mike. Let me close on Slide 12. This quarter demonstrates the earnings power of our diversified businesses and the progress we're making across Voya. We're delivering the improvement in the second half of 2026 that we said was coming while taking actions that position us for continued earnings growth, commercial momentum and increased cash generation. Across the company, we are driving growth in Retirement and Investment Management, continuing to improve margins in employee benefits and staying disciplined on expenses across the company, all while providing our customers with outstanding service at every opportunity.

Our disciplined execution alongside our capacity for growing cash generation gives us room to invest in future growth while continuing to reliably return significant capital to shareholders.

Before we go to questions, I want to thank our employees. Every day, their focus and commitment help our customers navigate some of life's most important financial decisions with greater confidence.

With that, I'll turn it over to the operator so we can take your questions.

[Operator Instructions] Our first question is from Mike Ward with UBS.

I was just wondering if you could dig into the softness in voluntary a little bit more in terms of the drivers and the outlook?

Yes, happy to do so, Mike. And Mike will take your question.

So just with respect to the voluntary piece, it does get reported as part of voluntary disability and other, and there was an assumption unlocking that I mentioned on the prepared remarks. If you adjust for the assumption unlocking, you'll get a reported loss ratio of 59% in that line item. But again, that includes disability and other in there.

When you look at just core supplemental health loss ratios, that was approximately 54%, very consistent with what I shared last quarter and in line with expectations. So the difference between the 59% and the 54%, it's really due to short-term disability loss ratios, which are higher than what we see in voluntary that's as planned, and then some onetime legacy UL impacts that we do not expect to repeat.

Stepping back, as we look at loss ratios within voluntary sub health, again, in line with expectations. I've talked about this earlier in the year that we expected net margins, importantly, to be consistent year-over-year as we've really gotten after expense actions. You saw that again this quarter. But also we think that it's really important for us to offer best-in-class voluntary products. That's what's ultimately going to drive more penetration with our customers and lead to more premium growth over time.

And then shifting over to Investment Management. The investment performance was a bit softer. Any incremental detail there? And is the kind of 1 basis point fee compression in retail, at least the good run rate?

Yes. Thanks, Mike. We'll let Matt take your question.

Mike, thanks for the question. Yes. So on the quarter, a bit softer in the 1-year number, as you alluded to, we show the 1-year number acknowledging that it will be quite volatile to 3 and then the 5 and the 10 still very strong, longer term, importantly, which is really the driver of client engagement. But for the 1-year number, I think about the rising yield environment and our duration sensitivity within fixed income being a headwind. There is meaningful market rotation in equities. That was an incremental headwind, not that large in equities. But then the biggest one was in our incoming growth franchise as we break out on Page 20 of the earnings deck. That's a pretty unique product with a blend of convertible bonds, high-yield assets as well as equities.

You saw a real underperformance in the convertible asset class and the duration sensitivity of high yield as well. So you'll see volatility in that unique product over time. You've seen it in past quarters. I'd say that while large on the quarter, not meaningful to client engagement, flows there remain strong, engagement remains strong and a bit of a feature, not a bug as far as being different than broad index indices and peers.

One, to follow on to your retail question. Yes, a little bit of softness in retail, nothing really super meaningful there to call out. I think year-over-year, we're 32.8% relative to 33.1%. So down a bit just marginally. It's hard to forecast quarter-to-quarter. Some of these higher fee, higher return products had headwinds on the quarter at a market level. So yes, a decent level on a go-forward basis, but really not a trend that I'd call out.

Yes. And maybe, Mike, just my broader step back on Investment Management is, really resilient performance all around, right? You think about the positive flows, strong long term investment performance across the board, healthy fee revenues, strong margins. So we feel good about the overall performance of the Investment Management business.

Our next question is from Tom Gallagher with Evercore ISI.

First question is on the Stop Loss side. So Mike, I heard your comment that claims remained favorable on '26 accident year versus '24 and '25. When I've listened to other players in the market on Stop Loss, you seem to be unique in that others are describing '26 as still elevated, but consistent with pricing and expectations. What do you make of that? Is it your re-underwriting you think that's driving that? And then also related to Stop Loss, how are you thinking about pricing heading into January '27 renewals?

Maybe I'll just start with a couple of comments and then toss it to Mike. So I think in terms of peers, we've talked about the fact that we were early. We're executing against a 2-year recovery. We do feel very good about the pricing and underwriting actions we have taken. And I'll let Mike unpack and we continue to see favorability in the '26 book of business. So I think it's really a matter of us being earlier and executing against that margin improvement, and we do feel very good about our ability to get this business back to a long-term earnings trajectory that we expect. But, Mike?

Heather, I completely agree. We were early and maybe kind of a way to think about that, that maybe evidence in a way that's helpful for the listeners is that when we were getting rate in late '24 for the '25 business, I mean, we were nearly alone in this, and we shrank the book. Now that was intentional, but premium was down 15% because we're going out and getting 21% rate increases when that isn't happening. You look at last year, we were able to get even more rate coming into 2026, 24%, we're able to keep the premium relatively flat. And so that was probably what I would call kind of the leg 2 of this journey. And as we've been talking about for a long time, this is going to be a 2-year piece because we were early. I think the difference this year, maybe to get to your second question, as it relates to 2027, we're seeing the hardest market we've probably ever seen in Stop Loss. We've been able to get even more rate heading into '27. That's true of what we priced in non-Jan '26, and what's happening in early days with respect to the? 27 book.

We're also seeing more RFPs, which is allowing us to be very, very selective in what we're writing. And so the step back is we're feeling very encouraged by where the claims experience is. By the way, that's through October, not just September 30. I think that's encouraging. We feel very good about how the market is hardening and we're being able to be very selective around the risk. I think earlier this year, Heather, Jay and I have been talking about the fact that this is the best that we felt around Stop Loss. I think we're continuing to see that as we move into November.

That's helpful color. My follow-up is just on the Retirement business, how I guess you're seeing diverging trends? On one hand, full service flows have been soft, on the other hand, record-keeping flows have been quite strong. Can you talk a little bit about, do you see that sort of bifurcation continuing? And what will that mean to growth and returns in the Retirement business because I think record keeping is lower margin. So how do you triangulate all that?

Yes, Tom, I'll let Jay unpack that. But I think the broader step back as we think about retirement is flows is certainly 1 metric. We're proud of our results, fifth consecutive year of positive flows. But as Jay will unpack, we're also looking at other metrics that frankly drive a more valuable franchise in terms of revenue growth. But Jay?

Yes. Appreciate the question on this. Listen, if you look at our mix this quarter, it's really been no different than the mix we've had in prior quarters. We did have visibility when we talked about flows early in the year that the middle of this year, we would see flows. We saw that. We did expect this large plan that was implemented this quarter on the record-keeping side. And similarly, as we look to '27, we've got visibility into our sales and pipeline. And will be back-half weighted, and that gets to the visibility.

Now when I look at respect to full service in the question, we did have some planned OneAmerica outflows, finishing what was a really successful integration this quarter. We did see, though, overall, our Q3 full service outflows are in line with the broader industry, and there's some equity market impact there. And you're going to see modest outflows in full service going forward, but that's really not how we judge kind of the retirement progress. We look beyond flows, specifically delivering strong results in our largest business. Full year sales growth right now is in the mid-teens. We've got net plan growth. I look at a very high 38% margin business. While we've been investing in wealth management, we've got almost $14 billion of defined contribution net flows and a 98% plan retention. Behind all that, our participant accounts right now are up more than 5%, and that's over $10 million, which is a really healthy number.

And then on a trailing 12-month operating revenue, which is really the ultimate equalizer on revenue is up 6%, with fee income up 12% and now fee income represents approximately 60% of operating revenue. So really a strong quarter in our largest business.

Our next question is from Suneet Kamath with Jefferies.

I wanted to start with the severance actions. It seems like we've had like 2 of these charges now in each of the past 2 quarters. Feels like they've come as a surprise to us, maybe they were part of your plan all along. But I guess, is there a risk now that you're -- well, maybe to start, what is sort of behind the need to take these actions? And is there a risk that you're sort of cutting into the bone at some point on this?

Yes, Suneet, it's Heather. I'll start and just say like whenever we make these decisions, which are very thoughtful, we are never going to do so and jeopardize the service we're providing for our customers. So that's first and foremost. But really, this is a follow-through of what we've mentioned all year long, which is how we're self-funding our growth initiatives and specifically the build-out of the wealth management, the leave in sourcing Frankly, some of the other things we're doing across our businesses of expanding [indiscernible] PEP capabilities, broadening array of privates and investment management. So lot of growth initiatives, but let me let Mike unpack that for you a little more.

Yes. I just would emphasize and maybe, Suneet, look, we take it really seriously the respect of not surprising investors as you, I'm sure, understand. We've got to be a little bit more careful on the severance front because that affects people. But as Heather said, when we were doing planning coming into this year, talking about wealth management. We were very clear that we were going to self-fund those investments that happened at the beginning of the year. We're right in the middle of budget and planning for '27 right now. And so when we talked about that, it was really important for us to demonstrate that, I think, we have both with the actions we took in the second quarter and the third quarter. So what it's ultimately allowing us to do, as Heather just detailed, it's allowing us to offset inflation, it's allowing us to hit the margins that we've shared, but importantly, it's allowing us to continue to invest for growth. But this is really not a surprise. We've been planning this all year and trying to make that as clear to shareholders as we possibly could without crossing a line.

Okay. That's understandable. My second line of question, I wanted to come back to something I don't think we've talked about in a while, which is the deferred tax asset. And if I go back to 2021, I think you guys talked about maybe a 5-year view where 50% to 60% of it would be utilized. I think we're kind of at that window now. So I just wanted to get an update there.

And then in the past, when you guys were asked about M&A, I think the prior CFO used to talk about the deferred tax asset as being something that you'd want value for because it could go away in some types of transactions. So I just wanted to get maybe an update there. Like I said, I don't think we've talked about this issue in some time.

Yes. On the second piece, Suneet, we wouldn't, in any way, speculate with respect to M&A and how that would work because ultimately, it's going to depend on facts and circumstances with respect to the DTA. But when you think about just as far as us being a cash taxpayer over the next handful of years, continue to expect that to not be material from a cash tax payment for the next 3 to 4 years.

We still -- when we look at the GAAP deferred tax asset, call it, roughly $2 billion, the net present value of that particular tax asset is still close to $1 billion. So we've been able to continue to maintain a pretty strong tax asset, and we're taking advantage of it. Frankly, it's a big part of the 90% after-tax adjusted operating earnings that's turning into cash. So we continue to expect to benefit from that, I would think, 3 to 4 years, Suneet, before that we get to that point where it's not fully offsetting. At that point, we'd still have some benefits. I wouldn't think about that as a cliff. It's going to be more of a glide path.

Our next question is from Ryan Krueger with KBW.

First one was just on the sub-adviser change. Is that fully done now, the $5 billion that came out this quarter? Or would you expect any further impacts there?

Matt will take your question.

Ryan, yes, happy to provide more details. So we had signaled last quarter that we had a sub-adviser outflow coming. So this is the $5 billion that you'll see the divestiture line item. It is there because this is tied to the AGI acquisition some years ago where we brought on the sub-advisory business where we distribute through this channel as opposed to our own distribution. So I also think of that as having about the same average basis points as our retail business broadly. So if you dimension the revenue I think, in the $15 million range and a full run rate revenue for a year basis. And so obviously, just partial for the quarter in for '26 overall, but something that we can continue to outgrow when we think about the business more broadly of a bit over $1 billion and continue to grow quite nicely over time.

As far as what's left, still a relationship there, about $5 billion. These are in areas where we continue to be very confident in our investment management capabilities and ability to, over time, also distribute our own products as sub-advisory can be volatile. It's a nice business, but you can see flows that are chunky from time to time. That's what you're seeing here. But our income and growth franchise team is strong, and we look forward to continued growth.

And then 1 follow-up on the voluntary benefits in others. The 54% in supplemental health makes sense. But it seems -- as you do grow disability and has a higher loss ratio, I was trying to understand how to think about where that total loss ratio expectations might be going forward as that does become a little bit larger part of the line?

Sure. Mike?

Yes. I think at this point, I would -- I wouldn't want to project just given it's so early in the build. I mean when you think about disability, Ryan, it's about 2% of total premium. So it's really, really small It did have 1 point or 1.5 points impact in the quarter. I think what we'll do to the extent that, that changes in any way to give you a sense of like how to think about what's running through that voluntary benefit to disability and other line, we'll signal that. But right now, I would just say kind of mid-50s is what you should expect coming through that line from a loss ratio. That's aggregate. So the 54% sub-health, including all the other pieces, disability, which is really, really small.

I think for us to step back on the benefits business, though, is that when we look at the progress that we're making with respect to excess capital generation, it's been a big story for us. We've doubled the earnings in that business, more than doubled the earnings in that business this year. What we talked about in some of the questions around Stop Loss is certainly feeling very good about that. So our expectation as we look into next years, the benefit business is going to continue to be a key part of the excess capital generation. That's why we have a lot of confidence in the fourth quarter and beyond continue to generate more capital, the benefit business is going to be a big part of that.

Our next question is from Wes Carmichael with Wells Fargo.

I just wanted to come back to stop loss headed into the fourth quarter. I think you saw some modest reserve releases this quarter that related to 2025. But can you maybe just give us a little bit of color on how you're thinking about the 2026 loss pick headed into the year? And maybe just comment on how committed you are to that business longer term given kind of the amount of attention it's taken?

Yes, sure. I'll let Mike start and then I'll add some additional color.

Thinking about it the same, Wes, like the reserves high end of the best estimate range, follow the experience that's coming in and then adjust reserves based on that same methodology as I shared in my prepared remarks, and we were getting into it a little bit with Tom. The experience is running well through October. So if that continues, I think that's a good sign for the fourth quarter. I think we've talked about the fact that we expected loss ratios and Stop Loss to be down year-over-year even on a calendar year basis. But our main focus is pricing this business at or better than target margins. I think we're making a ton of progress on that front. I think it's certainly boding well for the fourth quarter, but Heather, Jay and I are going to see what happens in November and December and then make the right judgment.

Yes. And then maybe, Wes, to your broader question about just how are we thinking about the product? Our focus has always been just making sure we get this business back to the target loss ratio. That remains our key priority as we've talked about that we do see with a hardening market and we see incredible client demand for this product. There's a real need for this product. And so it's one1 of those let's land the plane on what we expect. And as I've said all year long, we think this is a strategic asset in our portfolio, and it's one that we believe does give us leverage with some of our largest consultant relationships given the fact that there is a few -- there's a great demand and lower supply.

So I would just say is that we think this is valuable. We're going to get to restore the loss ratios and we'll always lift our head up and we're always evaluating our portfolio broadly from a strategic perspective. And right now, we want to make sure we execute on what we said was in front of us.

That's helpful. And just coming back to the severance related actions. I appreciate your commentary on 2026 admin expenses. But I think, Heather, you also mentioned there should be some benefit as well. So just wondering how you're thinking about that benefit for next year from these actions you've taken over the past couple of quarters?

Yes. I'll just start. And what Mike and I and the team have talked about is that we're focused on creating operating leverage as we go into 2027. We think that's also an important driver of shareholder value. And so that remains a focus, making sure that we're taking -- we're using some of these expense actions to be able to reinvest in the high-growth areas that we've talked about that we see high return opportunities particularly wealth management. But I'll let Mike talk a little bit more specifics.

Yes. And I'll kind of build off your theme, Heather, on just operating leverage, but maybe, Wes, a way to think about it, again, we're in the middle of budget and planning, so fourth quarter call is the right time to get more specific, but we can give you a sense. In Retirement, this operating leverage concept, and this has come up in a few different ways. Suneet was asking about this earlier with respect to the severance actions. We are creating operating leverage in retirement. What is it allowing us to do? It's allowing us to invest in growth capabilities like wealth management and maintain margins, so that 35% to 39% unchanged. You should expect us to be in that margin range. You should expect us to continue to be investing where we see growth opportunities like the named wealth management piece.

In Investment Management, we are also creating operating leverage there. This quarter, a little bit more of the severance was associated with the investment management business. But we're at a margin, call it, roughly 30% that we're comfortable with. Now that's coming off a base that was in the low 20s. We're now in the high 20s. We like that. So there's probably a little bit of operating leverage we see heading into next year. But again, that balance of investing in the business at the same time that we're making sure that what gets to the bottom line is what we plan to.

And then last on EB, I think this is the 1 where I just keep coming back to you on pricing, underwriting alongside the expense discipline, that's just what gives us a lot of confidence on the margin expansion continuing for the balance of this year into next.

Our next question is from Josh Shanker with Bank of America Merrill Lynch.

Just a question on proxy battles and whatnot. Obviously, there's an active investors making a lot of noise in your stock. I'm wondering if the recent behavior and the proxy battle they intend to engage in changes how you will engage that strategy in that discussion?

Yes, Josh, thanks for the question. Nothing has really changed in how we think about this all year long, and we're not going to speculate on any outcome. Our focus is on talking directly to our shareholders. We've got a robust shareholder engagement program, and we find the best feedback we get is when we're in front of them one-on-one, and we can answer their questions directly and frankly hear their feedback. And that's absolutely something we look forward to doing after this call.

The second thing I'd mention, Josh, is that our focus is on running the franchise and delivering value for our shareholders and our customers. And I think this quarter is another great example of us doing that, right? We're driving revenue and earnings growth. We're showing great expense discipline. We're improving the margins and employee benefits. That is all collectively leading to increase in cash generation, and we're returning that capital back to shareholders.

So we think that's -- those are good signs of a well-run franchise.

Our next question is from Alex Scott with Barclays.

I wanted to follow up on the margin bid in retirement. And specifically, I'm interested to what degree are you going to leverage the expense discipline to continue to build out record keeping, get more competitive on price and some of the platform offerings there?

Yes. I mean let me start and then I'll toss it over to Jay. I mean I think one of the things you'll hear from the team is, we continue to have a lot of pricing discipline across all of our different target markets. But one of the benefits is the fact that because we're a scaled provider where we play, we're able to sell business at attractive margins across each of our businesses while continuing to reinvest. But let me toss it to Jay to add a little more color.

Yes. I mean if you think about the retirement business, being a top 5 defined contribution provided by participant account, I mean it gets to the strength of distribution. So some of the areas where we see opportunities to grow in market, Heather talked about our 50% growth in emerging markets, 20% in mid-market and 50% in government, that happens because you make those opportunities to invest in distribution where you see an opportunity to gain market share in our service model.

The easiest way to continue to retain 98% of your business is to make sure that your service delivery is where it needs to be and putting the customer at the center of that. And so enhancing our capabilities and how we service our customer. And then the last is the tie through with wealth management. And really important, this bridge between retirement and wealth is real with over 10 million participants continuing to invest in guidance and advice at the workplace, listening to our clients that they're asking for this advice. That's playing out in RFPs on the retirement side, and it's allowing us to continue to maintain these relationships to and through retirement. It's early days, but that's really where we've been focused on our investments.

Yes. And maybe, Alex, if I can just build on Jay's last point for a second. I think it's also important to cross over the collection of our business is the value we have between Retirement and Investment Management. And so when you think about it from a pricing perspective and leverage, the fact that we've got our own general account that's managed by our own team as well as some of our own proprietary investment management products, those give us some pricing flexibility within the Retirement business, and it just speaks to another the point of the collective nature of our businesses and the value of the combined entity.

Yes, that's all helpful. Maybe a follow-up on the value of the combined entity actually. So Retirement and Investment Management can totally see how those are extremely complementary and connected. Employee benefits, can you just remind us there on like how intertwined is it from a core piece of strategy perspective, just in light of some of the things that are out there in terms of pressure to take actions and so forth?

I just want to sort of hear from you, like what are the ways that, that is strategically important with the retirement business?

Yes. Alex, I'll start, and then I'll let Jay build, but maybe a couple of things that I would talk about of employee benefits inside the franchise. First, one of the big values we talk about is the ability to sell bundles inside employee benefits. That's why the lead management business is so important for us to be able to grow life disability and continue our leadership position in supplemental health.

We have also talked about the Benefits Administration business as an important leverage point for us to be able to drive bundled sales and additional products. But one of the other things, and again, I'm going to let Jay elaborate where we see a significant opportunity going forward is we're a workplace company. And the fact that we win clients at the workplace, we see our ability to expand wealth management, not just into the 10 million participants we serve in retirement, but in addition to the other 8 million to 10 million participants that we serve through employee benefits and benefits administration. So that's something, again, we're early days, but we see a lot of opportunity, Jay?

Yes. I think that's the starting point I jump off on here, which is, we really do acquire our relationships at the workplace. And you look at roughly 10 million [indiscernible], in addition to 10 million-plus participants, it gets to a base of customers around 20 million. And so when you think about right now, one of the biggest concerns from employers is the ability of their employees to retire on time with a plan. We know that 90% of those employees are unserved or underserved, meaning they've got a 401(k) asset that's under what the traditional wirehouses and banks are covering. We think there's a tremendous opportunity for us to bring our advice and guidance to the workplace.

Now we also work with very similar intermediaries and brokers. And so the ability now that I'm seeing at the highest level for the first time in many, many years, they're building my role inside the Head of Workplace inside our brokers. And so the ability for me to talk to a leadership team that has oversight over both retirement and benefits is really powerful as we're thinking about planning for growth, as we're being very transparent about our pricing, and quite frankly, the targeted markets we're getting after.

So it's a great question, but I look at the totality of the workplace business as being more integrated today from the solutions than we've ever had and with Matt as a key partner on the back end and thinking about how we build those solutions together.

Our next question is from Pablo Singzon with JPMorgan.

So I think on the call, you highlighted investments in Wealth Management. I was hoping you could provide an update on what you're doing in employee benefits. So I think some time ago, you had talked about new management. Are there upfront investments there mostly done? And what other capabilities are you adding in southern retail and medical Stop Loss?

So I think there -- I just want to make sure we have your question right. It's really around where are some of the areas we're investing in employee benefits and some of the leadership changes? Do I have that correct, Pablo?

Yes, that's correct.

Okay. Great. Yes, I'll let Jay take it.

Yes. Pablo, I think if you think about the overall capabilities in the Benefits business, one of the things we wanted to make sure was we had the right leadership team around distribution, around our operating model and around our products. And what we've really wanted to do is bring in best-in-class with the best-in-class resources we have. We've got a really great integrated team from when I joined in January '25, that's really been focused on delivering integrated solutions, creating a more simplified claims experience. And overall, we know if we service our business really well, we'll have high persistency. And that's been a key area of focus.

Kind of sitting at the center of that is our leave and disability capabilities to call that out. Right now, that strengthens our integrated offerings. And our clients right now, when you look at CHROs, kind of the #1 capability they're looking for is really that in-source lead capability, and we've talked about that in prior quarters. Our brokers and clients right now are responding favorably. It's early days and we're getting feedback on how we can continue to even enhance those capabilities in year 2. So I look at the changes in distribution, the enhancements we've made in underwriting and risk, the areas we've done in service, leveraging our delivery centers. It's been a great 18 months of transformation. And right now, as Mike referenced, really turning this into a cash generation story is the next part that we're seeing in front of us right now.

And then my follow-up, it's a smallest piece of employee benefits, but group life loss ratios have been quite good. So what's behind that? And do you think this continues to sustain?

Mike?

Pablo, yes, look, in many ways, the group life piece is an earlier version of what we saw in Stop Loss, right, where group life during COVID loss ratios were quite, quite high. So what did the industry do? They went out and got rate. It wasn't as big a theme as Stop Loss because I think everybody understood it at that time because we're all dealing with COVID and seeing what's happening on the news. But that price has now gotten into products. And I think that's why we're seeing and a lot of the industry is seeing favorable loss ratios in group life.

Now we wouldn't overstate it. I think we still feel and quarterly this can move around that the low end to 77% to 80% is still the right place to be. We also expect that there'll be a little bit more competition around price as we head into the fall, so a little bit of the opposite, but not the degree of what we've seen in Stop Loss with group life. We tend to renew about 1/3 of the book every year. And so we still would expect this to carry into next year to some degree. I wouldn't expect quarters like you saw this quarter necessarily to be the trend, but we're certainly happy with what we've seen, Pablo, and certainly are encouraged by how that's contributing a part of the earnings journey we've had on employee benefits.

[Operator Instructions] Our next question is from Joel Hurwitz with Dowling.

A couple of quick ones for me. Just one more on Stop Loss. Mike, can you quantify for us how much better the incurred claims are on the January '26 block versus where the January '25 block was at this point?

Joel, we can, we're just not going to do it because, look, it will just set an expectation on where loss ratios might be. As I've talked about earlier, we're about halfway through, so we've got half way to go, and we'd rather not get that out there. But it is running meaningfully better that '24, '25, feeling really good about where we're at. We're going to be on the high end the best estimate ranges next quarter. If it continues down that path, I think this is a good thing, but just we prefer not to put numbers out there at this stage.

Got it. Worth a try. And then just my second one, in Investment Management, Matt, can you just provide some color on the other fee-based margin, the $8 million this quarter? And then any color on your outlook outlook for performance fees in the fourth quarter.

Yes, Joel, happy to give some detail there. So think about the other fee-based income as origination fees within the private asset business across both private income, our infrastructure business and beyond. So that's a number that will be volatile quarter-to-quarter, but a key driver of value as we continue to expand in privates and all. So that's what you're seeing there.

On performance fees, we've always guided towards that $10 million to $15 million million per year, perhaps orient towards the higher end of that range, hard to be confident with market volatility being so dramatic as it has been. Last year was quite strong. We called out the $33 million last year. We do not anticipate to be -- that to be repeatable. But think about $10 million to $15 million range perhaps towards the higher end, but to be seen as we enter the fourth quarter.

Our next question is from Andrew Kligerman with TD Cowen.

First question is around capital management and certainly very robust. I think I heard Mike mention $150 million to be repurchased in 4Q. How are you thinking -- I mean, I think I know the answer, but I want to hear it. How are you thinking about capital management? Is buyback the priority? Are you thinking of M&A? Are there any M&As in the pipeline out there? And how does that sync up with valuation at 1.5 on book?

Yes, Andrew, maybe I'll just start is how we think about cash generation is continuing to grow it. We've been loud about the fact that we expect cash generation this year to be above 25%. We expect to continue to grow that in '27. We've got a high bar for where we deploy it, and we expect to return a meaningful amount of that capital back to shareholders through share buybacks and dividends while we continue to invest in the growth.

On the M&A front, we are still in the market looking for retirement roll-up opportunities, but we continue to have a very high bar. And we think right now, our buying back shares is still the most accretive action that we can do. But, Mike?

Yes. Look, Andrew, I hope you're well. Just on the allocation priorities. It's always been highest and best use for us. I think feeling really good about the balance sheet right now, everything Heather talked about on capital generation. And maybe the only other piece I'd add is what we're doing from a share repurchase perspective, the fact that capital generation continues to increase. It's also allowing us to increase the dividend every year. So we're happy to do that for our shareholders this quarter. I shared what we expected for the fourth quarter. We're not going to go too far out on capital deployment priorities because that can shift. But we feel really good about what we're able to give back to shareholders, and you should expect the same as we move forward into 2027.

Super helpful. Going back to retirement, and I'll preface by saying I know you said flows are just 1 metric and the like. But just for modeling purposes, as I look at $2.5 billion of net outflows in full service and $16-plus billion net in retirement, and I get that Jay mentioned 1 episodic win, which is great. But how can we think about this annually or quarterly over a long-term basis? Do the retirement the full-service net flows start to reverse course? Or should we expect outflows, net outflows there? And should we regularly expect recordkeeping to kind of really overtake full service?

Yes. Maybe, Andrew, I'll start on this one is, when you think about the full service, we're going to perform probably more in line with the industry where you're going to see the industry in outflows as people take money out of their plans and as we see higher equity markets, and we're not immune to that. And on the recordkeeping, one of the things Jay has talked about all year long is we've had an incredibly healthy pipeline in, yes, we had 1 large plan this quarter, we had 2 in the prior quarter, we've got good visibility next year. And so I think what's important is that we continue to attract new clients to join Voya and retain long-standing clients with a 98% planned retention level.

So for us, I still think it goes back to the point that Jay made earlier, which is how do we measure the overall growth of the retirement business. And so again, flow is important as our recurring deposits are important. But what's the biggest driver is that revenue and earnings growth. And that's what we're continuing to do is to build operating leverage into the franchise and drive the fee-based revenue. And maybe I'll close with the key point Jay mentioned, which is 60% of revenues and retirement are fee-based. Overall revenue is up 6% and fee-based revenue is up 12%, and we want to continue that trend. And again, we appreciate the question.

This will be the end of our question-and-answer session. And this will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

All right. We are going to continue here at the 46th Annual Canaccord Growth Conference. I'm Joe Vafi, Equity Research Analyst here at Canaccord focused on fintech. And up next, we're very pleased to have with us the management team from Voya Financial, and that's Heather Lavallee, CEO; and Michael Katz, CFO.

So Voya is a leading publicly traded retirement solution investment management and employee benefits provider with an increasing focus on providing holistic workplace solutions across the breadth of employer sizes. The solution set is thoughtful and has synergies, cross-sell opportunities, which we will get into here in a minute. The company was formerly part of ING Group and now trades under the ticker VOYA on the New York Stock Exchange.

So with that, welcome, Heather and Mike.

Good to see you, Joe.

Thank you.

Great. So maybe we just -- to begin with, maybe you just kind of introduce yourselves and a very high level overview of Voya in your own words.

Yes. We'll start. So Heather Lavallee, CEO of Voya. And if I can, I'm going to stand for a moment and just talk a little bit about who Voya is as a firm.

Right. We have some slides.

We do have a couple of slides, so we'll go through that. So first, we're a diversified financial services firm. We have a leadership position at the workplace, and we generate high returns and superior excess cash generation. And what really makes us stand out among our peers is the complementary nature of our businesses.

So we'll talk about we've got a leadership position within Retirement, Employee Benefits and Investment Management, and it is all centered around our workplace strategy. That's really what connects us. And really what makes these businesses unique is the 90-plus percent cash generation that we drive as a firm. And why that is so special is it gives us the ability to continue to invest in growth in our businesses. At the same time, it's generating significant value for our shareholders. So we think that's an important theme.

If we go into the next page and kind of unpack that workplace platform. If you think about our businesses, so our Retirement business is our largest franchise. It's the center of the workplace strategy. And what makes us unique around this workplace strategy is we help employers and employees really right where their financial journey begins. And that is whether somebody is starting work for the first time or for employers is how they're providing the right benefit offerings for clients, including retirement savings, and our investment management arm really helps to provide that expertise and investment solutions to both clients, either on the employer side as well as on the institutional side.

You can see on the right-hand side, if you go back for just 1 second, Mike, we've got significant scale where we play, 18 million customers through the workplace, $1.3 trillion of combined assets from retirement and asset management, and over 50,000 employers.

If we go to the next slide and talk a little bit about what are some of the trends that we're able to take advantage of in the market. First, from an employer standpoint, one of the big things we're seeing as a shift is more employers are looking to offer financial advice and guidance to their workforce. Most American workers do not have access to a financial adviser, and we're well-positioned to be able to serve there. We also don't have customer acquisition costs when we're providing that advice because we're already serving those clients at the workplace.

One of the other things we see from an employee trend is they've got to make a lot of complicated decisions. They're seeing rising medical costs. That's where things like our supplemental benefit offerings be able to provide those right solutions. And then from an investment trend, we're seeing continued demand for U.S. dollar-denominated products, particularly in Asia as well as the need for income solutions across the workplace. So it just really allows us to unlock the value of our franchise.

And then maybe last slide for me before I turn it to Mike is just to talk about Retirement, again, largest business, most profitable business where we've had a significant advantage in the marketplace. So you can see here from the slide on the left, we've significantly outpaced our peers in terms of growth. We've done that both organically as well as inorganically. And what drives our scale is a combination of things. So we have scale of nearly $800 billion of assets under management. We're a top 5 provider, but we serve over 10 million Retirement clients. We've grown our participant base nearly 40% in just the last 2 years alone.

From a financial perspective, we've generated industry-leading margins for the last decade. Think about that as high 30s and for a couple of years, actually into the low 40s. And I talked about the durable nature of the 60% fee-based revenue. That's the part of the franchise we're focused in on growing. And if you see the average client tenure of over 15 years, our retention rate for our clients is in the high 90s.

So we've got significant avenues across the firm to be able to continue to grow. And then finally is our expanding wealth management business to be able to serve our clients more holistically. So a lot of avenues for us to continue to grow the franchise.

Mike?

Good afternoon. And Investment Management business, not just adjacent to our Retirement business. It's also core to what we do in the workplace. We have scale where we play. So when you think about where we play from an Investment Management perspective, think the insurance channel, think fixed income, think private capabilities. And this is a business we built over decades. So it has its roots in Retirement. It has roots even further back when we used to be in the insurance long-tail liability business where this business was managing the general account on behalf of Voya and even before that, ING, that's what we've been able to actually grow from a third-party perspective.

Why is that? It's about our ability to deliver for customers and how we show up and thinking about the problems that they need to solve as insurance companies and beyond. At the end of the day, it also comes down to performance, and the performance of this Investment Management business, if you look at it, the assets we managed over the last 3 years, 83% of them beating the benchmark, even more if you look at it on a 10-year basis.

So the combination of what we do for our clients, how we show up for our clients, the performance that we're delivering, that's what's driving the flows. You can see the AUM up 8% since 2021 on a CAGR basis. We're growing organically 2% a year. And that's what's driving the positive flows that you see in this particular business, and that's ultimately what gives us the confidence in operating leverage as well as the contributions to cash generation.

The other business, we have 3, so Heather talked about Retirement, I just talked about Investment Management, the third being Employee Benefits. And this is a business, again, that complements the workplace. When you think about the challenges that employers have, they're trying to manage health care costs. So we offer products for employers, think Stop Loss that help companies manage those costs when they want to be self-insured. And there's a rising trend of fully insured to self-insured that's happening right now, we provide that product.

Similarly for employees. When you think about Group Life, you think about Voluntary products, these are products that where employees are trying to get the most out of their paycheck, picking high-deductible health care plans, protecting themselves through supplemental products, that is really key in managing your overall paycheck and driving as much as you can to take home with you.

The market's been quite different in employee benefits over the last couple of years. When you look at the health care and the ability for companies to get rate coming out of COVID. In Group Life products like right now, we're at a point in the market where margins are actually quite good because we were able to get a lot of rate coming out of COVID. It's been a bit of a delay for our Stop Loss product. We're in the late innings of that. But that's also why I'm paying a lot of attention to this business because it's a big part of the cash generation improvement story that we have here at Voya.

And then finally, to bring it together and tie to that cash generation piece, we generated $650 million of cash in 2024, $775 million in 2025, and we expect to generate more cash this year. How we think about deployment of capital, job one is manage the balance sheet. We feel very good about the strength of the balance sheet. Second is investing in our company, obviously, in growth. The numbers you see on the left hand of the side of the screen here, this is all after growth investments. So we're growing cash generation. At the same time, we're making the appropriate investments that Heather had talked about at the top.

And then from a deployment perspective, we're obviously going to look at M&A, and we've done some transactions, which have actually cleared a pretty high bar that we have for ourselves when we do entertain M&A, and OneAmerica being a good example of that, where we added $60 billion of assets to our Retirement business. But after that, it's deployed capital through share repurchases and dividends. And the math is pretty simple here. You should expect us to be increasing dividends every year. Why is that? Because we're reducing share count through share repurchases and keeping the dividend load relatively consistent. So that's really the story in a nutshell for Voya. And maybe with that, Joe, we'd love to hear your questions.

Great. Thanks, Mike. Thanks, Heather. That was a great overview, great business units. I think the cash flow generation speaks for itself a little bit.

So a lot of members, a lot of business customers, a lot of AUM at that convergence of the workplace. I know we personally use some of your products at Canaccord. And yes, I've got kids so I know that flexible spending account pretty well myself.

But maybe we kind of talk about the units and this kind of focus on workplace. It feels, to a certain degree, that there's been a lot of evolution of a lot of parts of the enterprise. There was a supply chain, everyone focused on that for a long time with ERP solutions. Then we got, obviously, sales automation with CRMs and the like, but the HR function kind of got left behind a little bit, right? And it's definitely getting more attention now as an underserved area of more focused solution sets, more holistic, more technology at play.

So I think there's probably some synergies in cross-sells across your units that you're probably pursuing. So it would be interesting to hear a little bit about how these units can work a little bit better or even better together.

Yes. I'll unpack that a little bit. And if you think about it, and Joe, to the point, we have seen more and more Heads of Total Rewards, Heads of HR and Benefit Department, they want to work with fewer number of providers. But it is increasingly complicated. They've got smaller teams. And so they expect more from their partners. So if you think about where are the synergies and where do they exist. In Retirement, there is a friction to be able to move those plans, which is one of the reasons we've got high retention, great service ability to win.

But more and more, what we're hearing from employers is my employees need help with financial planning, period. And I think about that, I've got 2 adult kids in their early 20s and they're a little clueless when it comes to thinking about benefits and how to do planning. And the industry has typically focused in on ultra-high net worth individuals.

So for us, as a trusted partner at the workplace, whether it's on retirement or even on the benefit side of it, the fact that we can bring in wealth management and bring in financial planning, that is viewed as a benefit to the employer and to the employees. So there's a real synergy that we see there.

The second piece that I would point to is just to the point about employers having to do so much. One of the increasing complexities for employers is leave management and all of the leaves, whether it's state and federal that their employees are going on. So more often, whoever is selected as the leave administrator is typically going to win the bundle, the insurance products, the supplemental health. So we've invested in capabilities to increase the competitiveness of those offerings. And today, what we're seeing is roughly 48% of our leave management is bundled with another line. So that is another one where we're seeing the bundle.

And the final one I'd mention is the connection across Retirement, Investment Management and Wealth Management. So first, as an insurance-owned asset manager, where we're managing our own general account, we've been able to keep the spread income up of our Retirement business. But our asset management business brings that same capability to 80 different third-party insurance clients.

So being an insurance-owned asset manager has allowed us to drive great commercial success on the insurance channel, but we're also taking those same capabilities into our Retirement business and our Wealth Management business, whether it's through target date funds or ETFs so we can cross-sell within those businesses. So there's a lot of value to be able to unlock across the franchise that way.

That's great. That's a great overview. Thank you, Heather. Let's drill down maybe a little bit more into your Retirement business. The cash flow, like I said, speaks for itself. But you've also done some M&A there. It does feel like there's a vendor consolidation trend going on there. I think you clearly want to be one of those top vendors you already are. And kind of where we are in that journey, is there more M&A to do there? Could there be transformational M&A? It feels like that is obviously a great channel for expanding wealth management. And so feels like a really interesting opportunity.

Yes. The biggest thing we're focused on in Retirement is we're winning organically. We're winning and retaining, and so that's an important play. We feel as though we've got a great ability to continue to compete and drive growth. We're going to continue to be very opportunistic about inorganic in the retirement space. We've been focusing more on smaller roll-ups that allow us to still be active in the market with share repurchase, while at the same time, having enough capital that we could do a small market acquisition.

But having said that, we've got a very high bar for M&A. So it is not predicated. Our growth strategy in Retirement doesn't need inorganic. We see it. If we can be opportunistic, we'll lean in. We like OneAmerica because it not only added $60 billion of assets, but it added $4 billion of general account assets and it added additional capabilities and distribution. So we do see that there is more there. But we like our position as a top 5 provider. We are clearly a winner in that space.

To your point about wealth management, this has been an area that we have made some organic investments to be able to add advisers, to be able to bring in adviser tools to make them more productive as well as building out digital self-service for the DIY investors who are part of Retirement who want to be able to roll over. We see that as just -- that, frankly, is probably our most important priority is with already 10 million participants, we see a significant opportunity to bring those services into the market. So we really like our position and the growth opportunities we have that's going to drive the ongoing cash generation that Mike talked about.

And the only thing I would add, Heather, is that I would emphasize the point on high bar. I think to your question around transformational, likely more bolt-on than transformational. And then part of the reason, too, is it gets back to the buybacks. And I just like leaving this slide up on the screen because like when we look at buying back shares, we feel like we're acquiring a company we know very, very well.

Yes. You're buying something, you're buying yourself or you're buying somebody else for sure. Absolutely. That's great. Another kind of interesting area of your business where you're a market leader is in what we call Stop Loss insurance. And for the benefit of everybody, that's if you're an employer and you're a self-insurer, it's kind of backstop piece in case of like, I guess, major catastrophic loss, which is kind of a reinsurance layer. I think you're a top provider in the market. I think it would be interesting if just for everyone's benefit to understand the dynamics in that market where you fit in and how you see that as kind of a growth opportunity.

Yes, maybe I'll start. And then so if you think about medical Stop Loss, this is a business where we see higher cost of health insurance, but there's a limited supply of Stop Loss writers. And right now, we're seeing an increased demand. More and more employers continue to self-fund medical. They need the products we're offering.

One of the reasons we like it is the fact that we can annually reprice it, and we're in the process right now where we're seeing a significantly hardening market. So we are getting more price. We're retaining the book of business. We're seeing tighter underwriting terms and conditions, which is a favorability, and we were early in the repricing.

So essentially coming out of COVID, we saw excess profits for a number of years as people weren't necessarily going to the doctor. That kind of caught up. We started to see more people go back. We started to see more severe incidents. So we were early in the repricing. We've talked about a 2-year journey. And as Mike talked about, we're at the late end of that correction. So we feel like this is a business that can generate a lot of profits for us while meeting a real significant need in the market, but love the fact that we can reprice it every year.

And just the demand, I think, Joe, to your point, companies are looking at health care spend that's increasing meaningfully year in, year out. And it's even more expensive to provide that coverage to your employees, whether you have -- you're going to just take it on all yourself with no type of Stop Loss backstop or you're going to fully insure, what is just a better economic outcome for employers is to self-insure and have the Stop Loss on the back end of this.

And that's why we're seeing RFPs up so much. And we're seeing it up over double digits this year. That's like it's been a multiyear trend to that. RFPs are double what we had maybe 6 or 7 years ago. And so to Heather's point around pricing, the underwriting, like we're getting to do that with more at bats. And so that's allowing us to get even more selective on the risk and why we feel so confident about that being a really important part of that excess capital increase generation story for the back half of this year into next.

Great. And I think you're maybe a top 3 provider in that category? How is that competitive landscape, I mean versus you and the other top players? And is there M&A opportunity in there potentially, I don't know?

So it's a small group of companies that actually underwrite this. And I think when you look at it from a broker-consultant perspective, important that they're spreading the risk around through this. You're going to have time to time where you have competitors leaning in, leaning back based on where they're seeing their books. To Heather's point on where we are in the cycle, 2025 was a tough year for Stop Loss providers. You saw loss ratios in aggregate going up 6 or 7 points. We're being able to hold it more stable because we were early. We feel like we now have the market coming to us. And that feels good heading into the end of this year where we feel like we can get rate and significant rate, do that underwriting risk that we like and grow premium in a profitable way.

And so we're excited. This was kind of, hopefully, a once-in-a-generation thing with COVID. Group Life is an example where we saw that in a very acute way. We were able to get rate quickly there like competitors. That product is running better than target margins right now. And we think Stop Loss is just maybe 18 months behind where Group Life was.

Got it. So we're mostly through the reprice at this point, you would say?

We think so.

We think so.

Okay, that's great. And is there like a capacity constraint in this business, like from a -- I mean you probably reinsure your risk out, too, right? So could it scale? Could it be twice as big with your balance sheet? Or would that be a constraint?

Yes, it's not a balance sheet. It's an earning exposure. And what I would say is if you think about the pie chart of our businesses, we think Stop Loss and Employee Benefits is an important component of that business and serving clients at the workplace. But our focus is very much on growing the fee-based revenues across, which is really driven by Retirement and Investment Management. And think about that as 60% of the firm.

So we like the diversification play, but we also -- we want to -- we're managing kind of any products that drive the volatility. So an important component, but not one we're trying to double. We think that we continue to grow in Retirement, Investment Management, Wealth Management, drive the right growth and Employee Benefits at the right margin. We've got a lot of different levers to drive growth and cash generation, and that's what our focus is on.

The only thing I would add, Joe, is that we have kind of a maintained market share mindset here. And just by doing that, because of the leverage trend or the inflation in these products, you're going to get premium growth and still be very, very disciplined around what you keep in the book.

Right. The TAM is growing, right?

Yes. TAM is growing quite meaningfully.

Great. So if you look at your solution set today with this workplace focus, are there pieces that are maybe missing that you'd like to add at this point?

We feel good about what we've got on the table. Our most important is continuing to accelerate the wealth management expansion. So that's the most important is adding the advisers. We are certainly, like most firms, looking to take greater advantage of automation and AI. We think there's opportunity for increased operating leverage across the franchise. There are certain capabilities within Investment Management, whether it's emerging market debt that we want to be able to add. So I would think about pockets and pieces where we can complement. But right now, we really like the portfolio that we've got on the table.

Great. We will run out of time soon here, but your business, it's a little unique in the marketplace. There are a few moving parts. There's probably a few parts to the business that people don't appreciate that well. And so I'll give you a minute to talk about that.

Yes. I think if I think about what is maybe less appreciated or we would want to emphasize is the leadership position we have in Retirement. The fact that we have been a top 5 provider, consolidator with the high margins that we've generated with fee-based business that is at 60% of that business, I think that's a bit underappreciated. With wealth management, I think it's a bit underappreciated that we're not starting from scratch. Wealth management revenues have already been 10% of our business where we've had a very successful field advisory base. So for there, I think there is some misperception that we might have to put millions and millions into this to be able to get it to scale, and we think we can do that organically.

I think our asset management business has been well appreciated for the growth that we've been driving the Investment Management returns. And so I think the collection of the businesses -- and finally, I'd end on 90% of free cash flow, right? We have the highest free cash flow in our sector. Our ability to continue to drive cash generation and grow and how competitive we are in the spaces we're in.

And frankly, the last thing I would end on is the strength of my management team. I've got a terrific management team. I'm not saying this because Mike is sitting next to me, but feel very good about our growth and not only what we can drive in '26, but well into the future.

Great. Anything else to add, Mike?

I will leave it there, Joe. So we'll leave it with the strength of the management team.

We're going to keep you guys on time. Heather and Mike from Voya, thank you very much for being with us today and sharing your story with us.

Thanks for having us today. We appreciate it.

Thank you.

Good morning. Welcome to Voya Financial's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the call over to Mei Ni Chu, Head of Investor Relations. Please go ahead.

Good morning, and thank you for joining our second quarter earnings conference call. We will begin with prepared remarks by Heather Lavallee, our Chief Executive Officer; and Michael Katz, our Chief Financial Officer. Following their prepared remarks, we will take your questions. Also joining the call are Jay Kaduson, CEO of Workplace Solutions; and Matt Toms, our CEO of Investment Management. As a reminder, materials for today's call are available on our website at investors.voya.com.

As noted on Slide 2 of our analyst presentation, some of the comments during today's discussion may contain forward-looking statements and refer to certain non-GAAP financial measures within the meaning of federal securities law. GAAP reconciliations are available in our press release and financial supplement found on our Investor Relations website.

And now I will turn the call over to Heather.

Thank you, Mei Ni. Good morning, and thank you for joining us today. Let's turn to Slide 4. Our businesses performed well in the second quarter. Strong underlying results were affected by lower alternative investment performance and by severance costs we incurred to reduce our expense base. For the quarter, we delivered adjusted operating earnings of $1.51 per share, generated approximately $150 million of excess capital and returned approximately $200 million to shareholders through repurchases and dividends. As Mike will cover in more detail, fundamental performance trends and the immediate payback from these expense actions gives us a clear line of sight to increased earnings and cash generation in the second half.

Our performance this quarter highlighted continued execution of our strategic priorities. We delivered strong commercial results in Retirement and Investment Management. We're stabilizing and growing margins in Employee Benefits, and we are expanding wealth management capabilities to drive future revenue growth. Turning to our business results. In Retirement, we generated over $8 billion of defined contribution net inflows in the quarter, supported by continued high client retention and large plan implementations in government and corporate markets. In government markets, where Voya leads the industry, we've added more than $30 billion in assets and approximately 1 million participants in the past 18 months through organic growth.

We're also driving strong full-service growth in key segments with emerging market sales up over 30% year-over-year. We completed the final phase of our OneAmerica integration during the quarter, marking the conclusion of a highly successful acquisition and integration effort that has significantly exceeded the financial goals we set. We continue to build momentum in Wealth Management with year-over-year revenue growth of approximately 12%. Our retirement franchise now exceeds 10 million participant accounts and wealth management allows us to deepen those participant relationships and serve customers in a more comprehensive way. Our results this quarter demonstrate Voya's leadership position in the retirement market.

Our business is delivering consistent flows, high client retention and significant growth in participant accounts. Our presence across markets and expansive distribution footprint provides a durable foundation for sustainable growth. As we further develop our wealth management capabilities, we are building a platform that can serve an expanding customer base with the solutions they need for a confident financial future. In Investment Management, we generated positive net flows for both the quarter and the year, supported by client demand across a broad range of investment strategies and distribution channels. We expanded our product offerings during the quarter, including the launch of 2 multi-manager collective investment trusts that enhance the private and alternative asset solutions we bring to retirement plan clients.

Our investment performance remains a clear strength with 83% of assets outperforming peers or benchmarks over 3 years and 85% outperforming over 10 years. The strong outcomes we deliver for clients are driving continued commercial success and strengthen the role investment management plays in Voya's broader workplace and wealth management strategy. In Employee Benefits, we continue to improve and strengthen the business. In stop-loss, we have stabilized loss ratios and margins across the entire book while maintaining the strength of our reserves. Early 2026 experience reinforces our confidence that the actions we've taken will continue to drive higher margins and restore the business to its historical earnings power. Across the portfolio, disciplined pricing, underwriting and risk selection are improving margins and allowing us to focus on business that meets our return expectations.

I'll now turn it over to Mike to walk through the financials in more detail. Mike?

Thank you, Heather. Turning to Slide 6. In the quarter, adjusted operating earnings were $140 million or $1.51 per diluted share. That result includes an approximate $0.90 per share impact from alternative investment performance below expectations as well as severance actions. The alternative investment impact was driven primarily by macro market conditions affecting our private equity portfolio, which are reported on a 1-quarter lag. Year-to-date returns remain positive, and we expect results to improve in the third quarter.

On severance, we expect the resulting expense savings to fully offset the upfront costs by year-end. These actions improve efficiency, reduce ongoing expenses and allow us to invest in long-term growth. While these items affected second quarter EPS, the underlying business trends remain strong. Continued commercial momentum in retirement and investment management, along with improving margins in employee benefits support our confidence in meaningfully higher earnings in the second half.

With that, let me turn to the segment results. Starting with Retirement on Slide 7. Adjusted operating earnings were $190 million in the quarter. Results were impacted by lower spread income, reflecting alternative investment performance below expectations. Excluding the alternative investment impact, core spread income remained resilient, supported by reinvestment at higher rates.

On a trailing 12-month basis, adjusted operating earnings increased 6%. Fee-based revenue increased 10% year-over-year, now representing over 60% of revenue, and margins remained healthy at 38%. Defined contribution net flows were $8.1 billion in the quarter, supported by continued high client retention and large plan implementations in both government and corporate markets. Our platform now serves more than 10 million participant accounts, providing meaningful scale to drive future fee-based revenue growth. Stepping back, robust flows, high client retention and growth in participant accounts reinforce the strength of our retirement franchise.

Turning to Investment Management on Slide 8. Adjusted operating earnings increased 12% year-over-year to $57 million, driven by higher advisory fees across institutional and retail channels. On a trailing 12-month basis, adjusted operating earnings increased 11%, reflecting both those higher advisory fees as well as disciplined expense management. Net inflows were $1.2 billion in the quarter and now $6.3 billion over the last 12 months. Looking ahead, we continue to see healthy client demand for our differentiated investment capabilities and robust investment performance.

At the same time, the second half will include the wind down of a legacy relationship, which will modestly offset momentum in actively distributed products. Importantly, the revenue impacts from this are expected to be immaterial in 2026. Overall, Investment Management delivered solid earnings growth, supported by positive flows, healthy client demand and strong investment performance.

Turning to Employee Benefits on Slide 9. Adjusted operating earnings were $22 million in the quarter and $122 million over the last 12 months. In the quarter, we released $8 million of reserves and Stop Loss while continuing to hold reserves at the high end of our best estimate range. Early claims experience on 2026 business is encouraging and is emerging favorably relative to both 2024 and 2025 business.

We also continue to see favorable underwriting conditions as we complete the non-January 2026 selling season and begin pricing for January 2027. In Group Life, results continued to benefit from favorable mortality consistent with broader industry trends. This helped to offset higher voluntary loss ratios in the quarter, which were elevated in part due to nonrecurring items. For voluntary, while onetime items contributed to higher loss ratios in the quarter, the broader trend remains consistent with our expectations as expense actions are supporting our plan to maintain net margins. Stepping back, the underlying fundamentals across the portfolio remain strong, highlighted by the 5-point improvement in aggregate loss ratios over the last 12 months. Our disciplined approach to risk selection, pricing and expense management reinforces our ability to deliver further margin expansion and earnings growth in Employee Benefits.

Turning to Slide 10. We generated approximately $150 million of excess capital in the second quarter and $350 million year-to-date, with cash conversion above 100% in the quarter. We remain on track for 2026 cash generation to exceed 2025 levels, supported by strong cash conversion, the second half earnings outlook and the expense actions we've discussed. On capital deployment, we repurchased $150 million of shares in the second quarter and $300 million year-to-date. We ended the quarter with approximately $200 million of excess capital, preserving flexibility while continuing to return capital to shareholders.

For the third quarter, we expect to deploy at least $100 million towards share repurchases and the second half cash generation outlook gives us flexibility to deploy additional capital in the fourth. Return on equity was impacted by alternative investment and severance items, which is why we are explicitly calling them out rather than leaving investors to reconcile the effect on their own. Stepping back, the second half outlook is supported by business momentum, expense discipline and improving fundamentals. Most importantly, cash generation remains strong, and we remain on track for 2026 to exceed 2025 levels.

With that, I'll turn it back to Heather.

Let me close on Slide 11, which brings together the key points from today's discussion. We're carrying strong commercial momentum into the second half, particularly in Retirement and Investment Management. We continue to improve margins in Employee Benefits, supported by the pricing and underwriting actions we've taken across the portfolio. The expense actions we took in the second quarter alongside a more constructive macro environment, provide a tailwind for increased earnings in the second half. Our cash generation remains strong with 2026 on track to exceed 2025 levels and conversion rates above our 90% target.

We continue to be disciplined in deploying capital. We returned more than $380 million to shareholders in the first half of 2026. We are maintaining our commitment to return capital to shareholders in the second half with our repurchase program active in the market and at least $100 million of buybacks planned for the third quarter. Together, these actions reinforce our confidence in our strategy and position Voya to deliver continued earnings growth, strong cash generation and shareholder value. Before we go to questions, I want to thank our employees across Voya. Every day, they help our customers navigate some of life's most important financial decisions with greater confidence. Their focus and commitment continue to drive our success.

With that, I'll turn it over to the operator so we can take your questions.

[Operator Instructions] Our first question is from Ken Lee with RBC Capital.

Just one on the investment management side, the institutional net inflows in the quarter. I wonder if you could talk a little bit more about some of the drivers there and perhaps also the -- any kind of color or composition of the pipeline.

Ken. Matt will take your question.

Yes. I'm happy to unpack that for you, Ken. So first quarter -- sorry, second quarter, strong, that $1.2 billion, we're happy with. That's an annualized growth rate of about 1.6%. Importantly, within that, the revenue yield was up as well. I think that's a counter industry trend, and that's supporting the broader fee revenue growth, and it shows the quality of those flows. You referenced institutional specifically, that's $1.6 billion, so providing the flows for the quarter. I would continue to call out the insurance strength we have that's backed by both our fixed income and our private credit capabilities that continue to resonate in the marketplace.

That's both backward-looking and forward-looking to your question about the forward look. Overall, our demand for institutional and retail products remains intact. And look, we like the competitive position in those fixed income international markets, which we believe are poised for continued growth, and that's what drives that long-term expectation of 2-plus percent.

Great. Very helpful there. And one follow-up, if I may. Any color around what you're seeing in terms of planned RFP activity within the retirement business there?

Yes, Ken, Jay will take your question.

Ken, if you think about RFP volumes themselves, and they do differ across markets. If you think about our emerging market, you should think in terms of that mid-single digits, that 6% or 7% growth -- double-digit growth in mid-market, where we're seeing a lot of activity and finding a lot of success. In that large mega, it's been very consistent in prior years, low single digit, very healthy. And overall, we're really, really pleased with the RFP volumes that are really helping us through our commercial momentum.

Yes. And I think the broader step back, Ken, is that we continue to be very pleased with the commercial momentum in retirement and the overall performance in our largest and highest margin business.

Our next question is from Tom Gallagher with Evercore ISI.

A few on Stop Loss. Heather, I know you mentioned the early '26 experience gives you confidence that margins will improve in Stop Loss. Any sort of quantification that you can share on how we should think about that -- and is 3Q at all a possibility to change your 87% loss pick for '26? Or is it more likely need to be more seasoned that we would have to expect that to come through and have enough evidence to wait until Q4?

Tom, I'll let Mike start on the question.

Tom, yes, look, I think it's remotely possible in the third quarter, but I would circle the fourth quarter is really the more likely opportunity for that. Why is that? We're 1/3 complete coming out of the third quarter. We're 2/3 complete coming out of the fourth. And we just really have 0 interest in trying to accelerate outcomes. That said, when we look at what we're seeing in the '26 business so far, it's running meaningfully better than what we saw in both '24 and '25 coming out of August. Now to get to completion here, we're about 15% to 20% complete coming out of the second quarter. But we're still going to think about this at the high end of best estimate reserve ranges.

I think we've been very consistent about that. But what's important here is the work we did last year, when you look at the underwriting team that we put in place, the leadership we put in place, which has really been all about how we quote, how we review and select risk. The other thing is just our ability to get rate. We got 21% rate increase coming into '25. We got 24% rate increase coming into '26. And frankly, we're getting even more rate in what we're pricing in '26. So I think the step back here is we feel really good, but we don't want to accelerate any outcomes here, Tom.

Yes, Tom, it's Heather. And if I can just add a little more explicit points on the '26 book. Not only are we seeing better claims experience than the '24 and '25, again, it's early. We're also seeing a lower number of high severity claims, and we're seeing a lower number of frequency. So it's the combination of those in addition to the pricing, the reserve level. So that's just a little more color on the '26 book.

That's really helpful color. And just a follow-up and just if you don't mind bearing with me to follow my logic on this question. But -- so the interesting thing to me was the '24 accident year, which I would have thought had no juice left in it at all, actually had favorable development of 2 points between mid-'25 to now. But -- so that seemed favorable. But then the '25 accident year has only improved 1 point versus your reset 90% loss ratio versus Q4 '25. So I guess my question is, I would have thought these would have all seasoned by now, but it seems like it's taking longer. Is there something about these claims patterns that are stretching out the development for longer? Is that actually a trend? And what should we infer from that if that is, in fact, happening?

Yes. Tom, we'll let Mike hit more of the technical aspects of the question. I'll let Jay build a little bit more what he's seeing in the marketplace.

Yes, Tom, look, following the logic, I think what we talked about last quarter was there was a pending reserve cleanup that affected the reserve release in the first quarter. So when you think about how much reserve release was happening from the '25 book in Q1, it was about $7 million. And so the big balance of that was that pending reserve cleanup in '24 and '23. And so I think you're thinking about that right. I think we did see an acceleration of when claims were being reported. That's why we were careful at the end of last year. But there's not a new normal where it's taking over 2 years for this to season. I think what we talked about with respect to '25, I see that as 90% to 95% complete at this point. So it's getting pretty firmed up. And we expect a similar pattern for the '26 business. Jay?

Tom, yes, I think if you take a step back and you think about since Q1 of '25, we've made real substantive changes to the stop-loss leadership team and really the operating model itself. So we've got seasoned leaders in risk and pricing, underwriting, distribution, and they've been focused on advancing this risk and operating model improvement with a clear focus. We've been very consistent on this margin over growth. and we're seeing the early results come through in our '26 book. We're pricing every piece of business to get back to our target loss ratios. Right now, the market demand is up over 13%. And quite frankly, the supply, Tom, isn't keeping up with the pace. And so more employers are looking for stop-loss solutions.

And with the market starting continuously hardening, we're confident in achieving the desired rate actions and importantly, the persistency targets that we've set for '26. All this speaks to the strength right now of our clients and intermediary relationships, very active dialogue with them. And we remain focused right now on that disciplined pricing and risk selection and underwriting as we look to grow the business.

Our next question is from Joel Hurwitz with Dowling.

I wanted to touch base first on the expense actions. How much of the improvement in expenses in your back half outlook is driven by those? And do you think those are sustainable as we move into 2027?

Joel, Mike will take your question.

Joel, yes. No, we -- as we were getting across in some of the prepared remarks that we do expect a 6-month payback and for this to drop to the bottom line. We talked about very early in the year that we, Heather, myself, the team were very much focused on self-funding growth investments. And so you're seeing these actions is why we had so much confidence around that. We do give a sense in the appendix of the materials on how to think about the split between retirement and employee benefits. To your question around looking beyond this year, we view the actions that we took here as resetting the baseline heading into 2027.

We're just entering in the planning season here as we think about everything that we want to accomplish in '27 and beyond. And really the mindset that Heather and myself and the team has is operating leverage, full stop. And so it's also why we have so much confidence in the cash generation outlook. When we look at the actions this year, including severance, we still expect cash generation to increase. and we expect it to increase again next year. And that's partly due to these actions on expenses, but also the commercial momentum that we've talked about as well as the margin expansion within Employee Benefits.

Got it. That's helpful. And then just shifting to voluntary. Can you unpack the experience you saw in the quarter, just quantify the unusual items that you had? And I guess, where do you expect the loss ratio to go from here on that business? Is it still low 50%? Or are we creeping more towards like the mid-50s?

Joel, we'll let Mike speak to the loss ratio, and then Jay can speak a little bit more to what we're seeing commercially in the market on voluntary.

Yes. Sure, Joel. So just first, we did -- there were a couple of unusual items in the quarter. There were some billing true-ups that came out of the first quarter into the second quarter. So there's some normalization between those 2 quarters as well as some reserve adjustments through legacy products that get reported in that line because we have voluntary disability and other all in the same line. If I cut through all of that to your question, I would think of those having about a 2.5 point effect in the quarter. And so a more normalized number for voluntary in the 54% range year-to-date, 53%.

So that's kind of what I would expect in the second half of the year. Now remember, we're putting up IBNR with those loss ratios as well and the fourth quarter is really important for voluntary. So we'll see how this ultimately shakes out, but I think that's a reasonable starting point. And I think the broader message that -- and we talked about this even earlier in the year and late last year was that we did expect higher loss ratios because we're getting after customer value here with these products, but we expect to do that while maintaining very stable net margins. And again, I think this is a nod to the expense actions we took in the quarter.

Yes. Just to build, if you think about right now, our position, Joel, as a top 3 voluntary provider, the strength sits in our distribution, really enhanced service model, which matters in the market right now and our deep product expertise. And so the market demand is up year-over-year across all size segments for us. And sales are up 7% on a trailing 12-month basis. So the commercial momentum and results are there. In addition, our voluntary persistency over the last 12 months that we really focus on has been extremely solid. It's really a strong persistency business for us. And so the overall business fundamentals remain strong, and we really like our market position as we continue to grow the voluntary sales. I appreciate the question here.

Our next question is from Ryan Krueger with KBW.

One question on stop-loss. Just when you put everything together on the trends that you're seeing, do you feel like you can get back to your target margins in that business in 2027 at this point?

Yes, Ryan, it's Heather. Maybe I'll start and then Mike can build is that's absolutely what our plan is. And as you've heard us talk about all the pricing actions we've taken, the discipline around underwriting, when we're pricing business, we are pricing it to be within the target range in '27. So certainly, the ambition, right, early, we like what we're seeing on '26. We still have the reserves set at the high end of the range, but that is absolutely our objective, Ryan.

Yes. The only thing I would add, Heather, like you step back and look at the big picture here, Ryan, we -- when you look at late 2024, we came in to get as much rate as we possibly could. 2025, as Jay talked about, we put our teams in place. We were able to get more premium or get more rate and still hold premium flat. That's really that Jan '26 business. what we're seeing in the middle of this year is getting even more rate.

And that's just, I think, a nod to the market coming to us. We've seen that margins are deteriorating in the industry. That's a calendar year '25 to '24 comparison. And that's what's really allowing us to go get that rate. We got a lot of confidence in what we're seeing early as we head into the fall and price Jan 27. But every piece of business to Heather's point, that we've been pricing this year, last year was with the goal of getting this back to target margins.

And then just a quick one on recordkeeping fees. They were flat sequentially despite the strong flows you had this quarter. I was just curious, is that more timing related on when the flows came in? And as a result, should we see some tailwind there in the second half of the year?

Yes. Thanks, Ryan. We'll let Mike start and Jay can add some color.

Yes, you alluded to it, Ryan. It's just timing. We -- when you look at kind of the timing of when flows came in and when flows came out in the first quarter. So we expect really healthy fee-based margins in the second half of the year, and part of that is due to the organic commercial momentum in the second quarter. And then obviously, we feel really good about the macro heading into third quarter from second quarter, much different than what it was from second to first.

Yes. And Ryan, as we expected and we kind of shared last quarter, we expected to have strong commercial momentum in Q2, and we did. We generated over $8 billion of total defined contribution net inflows. And given the visibility we have in the pipeline, we remain positive on the second half of '26. While the flows do matter on this commercial momentum, and we're also focused on our continued revenue growth. And so if you look at a trailing 12-month revenue being up 10% high 38% margin. Fee income is up 16%, as Mike referenced, and that fee income continues to be an important part of our growth story. It now represents, as you heard, 60% of our operating revenue.

We also completed the final phase of the OneAmerica integration during the quarter. Not only did that provide additional [full-service ] flows, but it enhanced our distribution scale and overall capabilities in certain product areas. And so as I think about our position as a top 5 defined contribution provider, if you look at it by participant accounts, we exceeded [ 10 million ] in Q2. That reflects the strength of the distribution, as I referenced, our service model enhancements we've been making and overall, the ability to deliver consistent growth in our largest business.

Our next question is from [ Steven Chen ] with Morgan Stanley.

I'm calling in for Bob. Just want to ask about the retirement flows. So if we look at the quarter, the recordkeeping flows are quite strong and full service flows are improving from 1Q. So just curious, is that like still like the OneAmerica integration still impacting the surrenders? And are you expecting the surrenders to trend down in the second half?

Thank you for the question. I'll let Jay add color, but it's really 2 primary things. You are still seeing the effect of OneAmerica flows in the second half, which we expect to moderate. And we do see the impact on higher participant account balances from equity markets. But Jay, please add more color.

Yes, that's right. I mean if you think about the broader industry, there is this equity market effect of full service flows in Q2. I mean participants surrenders are really common in this high equity market environment. And as you heard in Heather's opening, our [ full-service ] sales in a really important market for us, emerging markets is up 30%. Kind of that broader step back is pretty clear. This was another quarter, another example of delivering strong results, as I said, in our largest business. We do, again, that visibility into the pipeline, we do remain highly positive on the second half of the year.

Just to kind of answer your OneAmerica question, that integration is complete, right? So we completed the final phase during the quarter. And that transaction has really validated what I would say is our disciplined acquisition strategy and is establishing us really as a strategic acquirer in the retirement space. The benefits of that transaction continue to materialize. We've added new capabilities, as I referenced, broader distribution opportunities and right now, incremental sales momentum we're getting from that acquisition, supported by strategic relationships.

Those capabilities are in areas you should think of like ESOP and self-directed accounts and tax-exempt capabilities. So really happy with both the talent we acquired, the financial results and the new capabilities that are driving additional commercial momentum.

Okay. That sounds good. And the second one, just wanted to follow up on the strong pipeline on the recordkeeping in the rest of the year. Just wondering if you have any update on the pipeline since like 1Q yes.

Yes. I'll take it, just really building on what Jay talked about is we've got visibility into large plan implementations in the second half of the year. As we talked about on the first quarter call, we are confident in our ability to deliver positive flows. And as Jay broadened the point, we think retirement in our business, our margins have held up well. We're driving fee-based revenue. So it's more than a flow story in retirement. Our largest business continues to be our most profitable and is set up to -- for us to be a strong leader in the retirement market. But all in all, a very strong outlook for the year.

Our next question is from Wes Carmichael with Wells Fargo.

So alts were a bit of a headwind in the quarter. It's kind of bounced around maybe the past few quarters. But just wondering if you have any color on how you're thinking about alts performance in the back half of this year.

Sure. Matt will take your question.

Yes. Wes, let me unpack that a little bit for you. So you're right, second quarter alternative income was a modest loss, 2.5% annualized. That's a weak result and compares unfavorably to the first quarter return, which was just over 8% and our long-term expectation of 9%. Some context on that. Our alts portfolio, as you know, is focused on buyout private equity. And this quarter's result was impacted both by the consistently lower realizations within the industry that's been well publicized, along with the volatility in broader equity markets in Q1, which informs the valuation period.

That's coupled, of course, with the push higher in interest rates. So that's the valuation backdrop. Importantly, our diversified private equity holdings within this portfolio continue to be in harvest mode. We look to moderate the size of the portfolio and focus more on income-oriented and fee-generative opportunities. going forward. And that's nothing new. That's been a path over multiple years. So expect that to continue.

Also importantly, looking forward, the strength of the broader market in 2Q and moving into 3Q does provide a favorable backdrop. So we do think moving forward, Mike alluded to this in his remarks that there's a scope for an improved result in the next quarter. Long term, not adjusting the 9% target, we will out achieved that over time, but obviously, some volatility from quarter-to-quarter.

That's helpful. And then just wanted to come back to the broader discussion on expenses. I know you're always managing expenses. But if I think back, it sounds like coming into maybe 2025 and 2026, admin expenses were going to be a bit elevated with some investments into the business. But with this announcement this quarter, it seems like there's real explicit actions for savings. So just wondering, has anything really changed? And what drove the decision on severance actions now?

Yes, Wes, it's Heather. I'll start. Really, this is just part of the discipline and DNA of us as a firm is always being focused on disciplined expense management. Here, we took operating efficiencies across our business, specifically within Workplace. If you go back, Mike and I had been signaling earlier in the year of our plan to self-fund the growth investments. And so think about us as really being very disciplined with not only capital, but our operating -- overall operating expenses. And so within the organization, we've been focused on reallocating expenses into our higher growth areas, still managing our business to targeted unit cost levels and operating efficiency. And that's just really how we operate. This is not part of any special program, but we think this is just part of how good management teams run companies.

Our next question is from Josh Shanker with Bank of America Merrill Lynch.

You talked about really seeing the fruits of going after price in the stop-loss market. But obviously, 2Q is not that important a quarter for sales and benefits, but all the lines of business tend to have weaker sales than a year ago. Price may be part of the reason maybe you're not as competitive as you were before. Can you go product by product and talk about what's happening in sales on the benefit side?

Yes, Josh, I'll let Jay unpack that for you. But if you think about -- when we've been talking about the margin improvement in employee benefits, it's been beyond Stop Loss. We've been focusing in on improving margins across every line of business within. And -- but yet, we still believe we're very, very well positioned for continued growth in this business. But Jay, please?

Yes, sure. And I'll start here, Josh. I mean, as Mike referenced, look, start as a step back, the total aggregate loss ratio improved 5 points to 74% year-over-year. So we like -- the team has really been focused around the execution on our pricing actions for the portfolio, and that's translated into that overall loss ratio improvement. I talked about voluntary specifically sales being up 7% on a trailing 12-month basis, being a top 3 provider there. Really happy with that business fundamentals and the feedback we're getting in the marketplace, whether it be on a stand-alone basis or in a bundle is really, really strong. In Group Life, historically, Q2 isn't a big sales quarter for Group Life, right?

We manage that business on full year results. With that said, in Group Life, sales are up 5% on a trailing 12-month basis. And -- when I look at life and the broader employee benefits portfolio that you're referencing, our brokers and employers are starting to look for these bundled solutions and our leave administration sits at the center of that bundle. So through Q2, 48% of all of our new life and absence and disability cases were bundled with supplemental health, where we're a market leader, and that's up from 42% last year. A little bit of a step back, while our leave administration continues in Q2, it's in early days. This solution is helping to broaden, if I think about our value proposition across the entire portfolio.

So as a reminder, we launched that integrated leave and disability claims solution in January of this year. You should think about it as bringing together an AI-enabled end-to-end workflow, which is something our customers were really looking for. And this simplifies the experience for our employees right now, it's improving the compliance for our employers, which is really important. And then overall, it strengthens our ability to bundle and retain clients. And I talked about the importance of bundle. So overall, in the portfolio, I don't look at Q2 as a point in time. I look at full year results and I look at our trailing 12 months and the business is growing.

Can we say that business that was a year ago written is renewing in a different quarter than 2Q today or the business that you wrote in 2Q last year doesn't meet your pricing appetite this year, which explains part of the reason for the decline?

Josh, can I ask you just a clarifying question? Are you asking across the broader employee benefit portfolio or specific to a certain product line?

No, across the portfolio, I mean, we don't have so much detail, but there's 3 or 4 lines, and they're down. I understand we should measure over a 12-month basis, but I assume there were renewals that were done in 2Q '25 that came up for renewal in 2Q '26 or maybe they're renewing in a different quarter this year.

Yes. Josh, it's Mike. Like -- and you can see in the in-force premium. I get to your point on renewals. Jay was talking about sales, the voluntary line is up. I think what you're seeing is in group life with the renewal premiums being down. And as Heather mentioned, we've had this broad thinking around making sure that we're growing margins. That's going to be the most impactful piece on overall cash generation increase, earnings increases in [ EB ]. Group Life, the puck is moving here. We've talked about this. We've had a handful of quarters here now where the loss ratios have been well below 77% to 80%.

So we're adjusting for that. I think in some ways, group life is like on this kind of a year or 2 ahead of where stop-loss was coming out of COVID. So there is a little bit of adjustment for that as we're working through some of the renewals. You see that in the results, but I think the step back is we feel good about where we're heading into the fall. Jay and team are making some adjustments around how we think about pricing. We think that will make us a little more competitive on that product line.

Our next question is from Pablo Singzon with JPMorgan.

I had questions about the investment management business. So I think if you look historically, flows in institutional have been quite good for the past few years. But in retail, they were positive but turned negative the past 2 quarters. So just hoping you could provide perspective what's going on there?

Pablo, Matt will unpack that for you.

Pablo, happy to unpack that. So retail, you're right, a strong quarter, mostly driven by institutional as a reference. Within retail, it's really 2 different stories. In the U.S., happy to see positive momentum around key products, particularly in our fixed income franchise as well as in specialty equity components like our small-cap growth, a really standout product with strong demand. And in general, happy with the fee rate we're getting on that mix of business. The overall result for the quarter was actually dampened by some redemption activity overseas.

If we think about the first half of the year, market volatility and some macro uncertainty in the international arena, we think that's what's causing higher redemption rates. sales levels, gross sales levels still very strong. That's an important indicator as well. So as we look into the second half, we have reason to believe that some of that redemption activity will moderate and the top line sales growth will persist, and that could drive an improved outlook for the second half of the year in retail specifically.

Got it. And just as a follow-up on Investment Management. I think previously, you had laid out a 2% organic growth target for the year. I think through the first half, you're running below that. And Mike has referenced, I think, a legacy plan that might run off the back half of the year. So I guess if you put everything together, how comfortable are you sort of like hitting the 2% and effectively seeing growth accelerate in the second half of the year?

Matt?

Yes. So let me unpack that a little bit for you. I'll go to the runoff business first, correct, like we're never certain exactly how the future will play out second half of the year, but it is important to call out, we do think some headwinds. This is sub-adviser-related business in the U.S., not currently distributed by Voya. And the asset base has been in rundown mode, and we like the opportunity to be able to revive that with our own distribution channels moving forward. So in sub-advisor space, you'll have some lumpy ins and lumpy outs. We want to signal that we -- while not finalized, I want to put that out as far as a headwind. So that leans against that long-term growth rate.

Importantly, as Mike referenced, not a meaningful revenue impact in '26, and we have a broad array of strategies and products that are performing well that are positioned to grow and can provide growth into the second half of the year and beyond. More broadly, as far as the 2% level, that's a long-term number last year, quite a bit above it, just shy of 5%.

We are still out kicking the industry quite meaningfully with our organic growth rate. There will be some ebbs and flows. We like the pipeline. We like the top line. And as you referenced, we like the revenue we're getting. So while net cash flows is super important, our revenue delta year-over-year, prior quarter year is up 8%. And that shows that we're not just getting net cash flows, we're getting revenue that comes with that. That's ultimately what's driving that double-digit operating income growth.

Our next question is from Suneet Kamath with Jefferies.

I wanted to ask about the Wealth Management business. Heather, I think you alluded to 10 million accounts. But I was wondering if you could give some data on the AUM that you have in that strategy and what is sort of the average account size?

Yes, happy to, Suneet. I'll let Jay talk about that. But you -- what you can see in the supplement is about $33 billion of assets within Wealth Management and as I referenced, 12% of revenue growth. But let's -- we'll have Jay talk a little bit more about what we're seeing within the wealth management build-out.

Yes. Suneet, if you think about that AUM number, to answer your question, that's 16% up year-over-year. Heather referenced a revenue growth of 12% if you think about the increasing demand right now from plan sponsors and employers, they are asking for retail advice and guidance at the workplace. If you think about 3, 4, 5 years ago, that gateway wasn't as open as it is now. And so given our position in the workplace, we are positioned really well to continue to think about growth from wealth management. It gives us just, quite frankly, a stronger way to retain and recapture and even deepen the relationships with our plan sponsors and employers by providing the solutions at the right moment for their employees.

Our adviser count year-to-date, just to give you a little bit, is up 20%. We've now got over 650 advisers. Primarily, that growth is in the licensed sales desk advisers, which is supporting our growing customer base. And while there's -- when you think about that 10 million participants in our retirement business, I'm also really pleased with the productivity of these advisers.

So we are getting through our and achieving our productivity targets, which gets to the experienced management team we've been recruiting and the training that sits there and quite frankly, the experienced advisers we've been able to bring over from other sales desks. In addition to that, as you think about this, we've made some tech enhancements that are elevating the productivity of our advisers. So we just continue to optimize the business and are positioned for growth.

Okay. And then, Heather, I wanted to ask about Benefitfocus because you did the deal a couple of years ago. I think there was a lot of enthusiasm around it. And I don't know if you've just changed the name of it or whatever, but you don't really talk about it anymore. So I was just wondering like what's going on with that business post acquisition. And part of the reason I ask is I think some other companies that made similar acquisitions, ended up either exiting the business or taking some goodwill charges. And I just want to get an update on that from you guys.

Yes. Thanks, Suneet, for the question. And I'll start is we continue to like the strategic importance of benefits administration across our workplace and employee benefit capability. We'll say that it has taken us longer to get to the economics that we expected within Benefitfocus. But we feel like we're really stabilizing and moving into the next chapter. And why am I so confident in this is that we've seen the revenues have been stable. They've been roughly $200 million.

Jay will talk a little bit about the look forward since we acquired. But we've seen real significant improvement in client retentions. We've also seen improvement in client satisfaction, both when we're doing onboarding and ongoing servicing and I'll toss it to Jay, but we think that this is a significant avenue of our workplace to wealth management strategy. So Jay?

Yes. I couldn't agree more. As you think about Benefitfocus, very much in market, very much a core part of our workplace business. As you think right now about employers, right, they're increasingly asking us for integrated solutions. And so we're leveraging that benefits administration platform to connect our clients with other complementary Voya capabilities like wealth management, where we can create what I would say is a stronger growth engine across the entire enterprise. More specifically, Benefitfocus from a pipeline perspective through Q2 is up 32% over prior period.

Sales are tracking ahead of last year by over 8%. And more importantly, our average sole case size is up 80% year-over-year. And more broadly, Benefitfocus, if you think about what it's actually doing, it's helping customers right now, and we think about this a lot, [ bend ], the health care cost curve, which is critically important. It's guiding employees really to effective health and savings decisions, which is one of the more important decisions you're seeing at the workplace. And it increases that financial protection as you adopt greater adoption of those voluntary benefits that are offered through that platform. Overall, this fits really well into our workplace portfolio and a business we look forward to continuing to grow.

And Suneet, just, it's Mike. Just one other piece, so you can follow along with us. When you look at the Benefit business, the fee-based margin line, I mean, that's basically Benefitfocus Ben admin. You can see that at $227 million over the last 12 months. So just if you want to follow along with Ben admin as we move forward, that's where that sits.

Our next question is from Wilma Burdis with Raymond James.

How do you see the long-term pricing trend for stop-loss? I realize it's been over 20% for the last few years, but are you seeing any indications of starting to normalize more towards longer-term high teens?

Wilma, yes, right now, it's very consistent. I think over time, absolutely, I think you would expect this to normalize. Again, things go through cycles. We're at this part of the cycle, and I talked about the market coming to us. We got more rate when we came into this year. We're getting more rate this year. That -- as far as we look at first dollar inflation leverage trend, we expect it to be at similar elevated levels. So the key thing, and Jay talked about this, too, it's not changing the demand for this product. I mean RFPs are up double digits.

They're probably doubled over the last 5 to 6 years because it's even more expensive what companies are dealing with, with respect to First dollar if you want to be fully insured. So this is a really valuable product in the marketplace, and that's why we've been able to get rate. And our expectation is we're going to be able to do that again in the fall. And it's why you hear us talking a little bit more about modest premium growth versus more of that kind of flat premium growth we saw coming into this year.

And it seems like there's more industry interest in growing 401(k)s, whether that's to add private 401(k)s or for other reasons. And the last 10 years or so, it's been very focused on annuities. So it seems like that's shifting a little bit. What do you think is underappreciated about the opportunity in 401(k)s and in your business?

Yes. Wilma, I guess I would -- I'll start and just say I think one of the things that's underappreciated is the leadership position we hold in this market. If you think about both in our prepared remarks and our follow-on is that we have been growing in every segment we serve, both in terms of top line, we've had very strong client retention. You look at the results that we've demonstrated from a margin perspective for well over a decade, we have been consistently within our target margins and even on the high end, if not above, for a period of time.

And that just goes to good expense discipline, how we have been running the business and that what we're super excited about, and I think why there continues to be interest is what Jay has been talking about with wealth management. There is a significant opportunity and the shift from our clients where they are now expecting these services from their retirement providers because at the end of the day, most American workers don't have access to a financial adviser.

And the retirement provider and what we're building in wealth management is a great avenue to be able to provide that financial guidance directly through the workplace. So that's one of the reasons why we are increasingly bullish about our largest and most profitable business.

Our final question is from Andrew Kligerman with TD Cowen.

Right, last but not least. Kind of a more nuanced follow-up on flows. Could you -- Jay, could you talk to full service and retirement? It sounds like you're saying, based on what you said in earlier questions that you can see that flow reversing to positive in the not-too-distant future. And likewise, to Matt, on Investment Management, with retirement down the last 2 quarters, it's been a little choppy. But do you think -- I mean, it sounds like you're not going to get to the 2% net flow contribution to assets this year in the back half, but longer term, that's what you see. So just kind of more nuanced on the flows in each of the big businesses.

Yes. I think maybe, Andrew, I'll try to summarize what I think we heard from both Matt and Jay this morning is on the retirement side, you heard us talk about positive flows for the full year in full service. As you kind of flavored a little nuanced because you saw still continuation of some of the outflows from the OneAmerica. We knew that expected. We expect that to moderate. You also saw higher participant outflows as a result of higher equity markets. But overall, we feel very positive. And the point we want to hit home is this is beyond a flow story.

This really is also a revenue growth story for both businesses. And as Matt referenced, we think that the 2% organic growth rate is the right long-term rate. We've had a couple of years of really out kicking that well above. This year, a little bit stay tuned just given the headwind. But more importantly, margins up, the revenue has been solid. And so when we think about these 2 businesses combined, you're talking about significant scale, close to $1.2 trillion in assets between both businesses, growing a lot of commercial momentum in both retirement and investment management.

Got it. And then just finally, there was a lot of talk about following the whole Toms Capital situation about your stance on whether Voya would consider an offer for the company. And then the same thing on the [ Med Stop Loss ]. It seems like you were disinclined toward both, but I'm wondering if there's any change or any update you would make on that.

Yes. I appreciate the question, Andrew. And I'll hit maybe 3 key points is, first, -- we don't comment on rumors or headlines nor do we allow ourselves to get distracted by it. At the end of the day, the Board and management, we're always going to do what is in the best long-term interest of shareholders. That includes restoring the stop-loss business to the target margins that we have talked about. It also includes us executing on the organic growth plan that we've laid out. And I think as you've heard this morning, Andrew, I'll kind of reiterate why we continue to have such confidence and conviction in our growth strategy is we are delivering shareholder value today.

We've got a lot of levers to be able to do that from the growth in retirement and investment management, the growth we're seeing in wealth management, the restorations and margins in employee benefits -- and all of those combined generate a significant amount of cash. You think about us as a cash generation machine above 90%, and that gives us a lot of flexibility in how we deploy that. We have been returning a significant amount of capital back to shareholders through share buybacks and dividends. And we still have the availability to invest in our business and pursue retirement roll-ups, which we have a high bar for. So at the end of the day, Andrew, I think it's a great opportunity to close is got a lot of confidence and conviction in how we deliver value for shareholders today as well as into the future.

We have reached the end of our question-and-answer session. That will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Good morning. Welcome to Voya's First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the call over to Mei Ni Chu, Head of Investor Relations. Please go ahead.

Good morning, and thank you for joining today's call. We will begin with prepared remarks by Heather Lavallee, our Chief Executive Officer; and Mike Katz, our Chief Financial Officer. Following their prepared remarks, we will take your questions. Also joining the call are Jay Kaduson, CEO of Workplace Solutions; and Matt Toms, CEO of Investment Management.

As a reminder, materials for today's call are available on our website at investors.voya.com. As noted on Slide 2 of our analyst presentation, some of the comments during today's discussion may contain forward-looking statements and refer to certain non-GAAP financial measures within the meaning of federal securities law. GAAP reconciliations are available in our press release and financial supplement found on our Investor Relations website.

And now I will turn the call over to Heather.

Thank you, Mei Ni. Good morning, and thank you for joining us today. Let's turn to Slide 4. Building on our 2025 performance, we are off to a strong start in 2026. In the first quarter, we delivered significant growth in revenues, earnings and cash flows. We grew adjusted operating EPS by 13% year-over-year through strong execution across the enterprise, while continuing to deliver a return on equity above 18%. And we generated approximately $200 million of excess capital, returning that same amount to shareholders through repurchases and dividends.

Executing on our priorities, we are building on our strong commercial momentum, maintaining robust margins in Retirement and Investment Management and continuing to drive margin and earnings improvement in Employee Benefits. Our momentum is clear, and our advantage comes from our diversified resilient business model built to perform across markets and business cycles. I'd like to touch on a few highlights from the quarter.

In Retirement, we generated over $200 million in adjusted operating earnings, delivering trailing 12-month margins of 39%, while continuing to invest in future growth. We continue to expect positive net flows for the full year, more than offsetting the exit of a large recordkeeping plan in the first quarter, which was expected. Revenues grew year-over-year supported by more than $50 billion in annual recurring deposits, giving the business a resilient foundation across market conditions.

Our acquisition of OneAmerica has been a strategic and operational success. It has meaningfully strengthened both the scale and earnings power of our Retirement business, which now serves nearly 10 million Retirement accounts. We expect to complete the integration in the second quarter. And we're building on that strong foundation by expanding the advice, guidance and planning we provide through our wealth management business helping customers better meet their financial needs.

In Wealth Management, expansion remains on track with first quarter revenues up more than 12% year-over-year. In Investment Management, we entered 2026 with strong momentum, driven by continued demand from clients across both Institutional and Retail markets. We remain confident in our ability to deliver 2-plus percent organic growth this year. We drove margin expansion by continuing to scale key strategies across insurance, private and alternative assets in international Retail markets. These are the channels where we have clear competitive advantages and are seeing strong commercial momentum.

Our investment performance shows we are delivering for our clients with 78% of assets outperforming peers or benchmarks over 3 years and 82% outperforming over 10 years. In Employee Benefits, we generated significantly higher operating earnings, through disciplined execution across the portfolio. Across all lines within the business, decisive underwriting and pricing is resulting in higher margins. In Stop Loss, the pricing, underwriting and reserving actions we took last year have us firmly on the path to full margin recovery in this business.

Our near-term focus on restoring the profitability and earnings power of this business is the most value-accretive path we can take for shareholders, and this value is already emerging in the results we delivered this quarter. Mike will provide additional detail in a moment. Our strong results this quarter reflects the durability of our cash generation, our strong earnings power and our continued commitment to disciplined execution.

With that, I'll turn it over to Mike to walk through the financials in more detail. Mike?

Thank you, Heather. Our financial results this quarter were strong, providing a solid start to the year. In the quarter, adjusted operating EPS was $2.26 per share. On a trailing 12-month basis, adjusted operating EPS totaled $9.11 per share representing a growth of over 20%. EPS growth highlights our consistent execution and capital discipline.

We generated higher revenues across all segments and our continued expense discipline is sustaining our robust margins in Retirement and Investment Management while expanding margins meaningfully in Employee Benefits. In the quarter, GAAP net income was lower than adjusted operating earnings, primarily due to noncash items. Overall, our results highlight the durability of our business mix and the resiliency of our capital generation. With that, let me turn to our segment results.

Turning to Retirement on Slide 7. Retirement continues to demonstrate the strength of our scaled franchise. We generated $209 million of adjusted operating earnings in the quarter and $960 million over the trailing 12 months, representing a 14% year-over-year increase. Higher net revenues were primarily driven by an 8% increase in fee-based revenues.

Fee-based revenues have grown meaningfully over the last several years and now represent close to 60% of total net revenues for the segment. Spread income remained resilient, reflecting disciplined portfolio management, and continued focus on risk-adjusted returns. Margins remained strong at over 39%. Looking ahead, we expect expenses to step down in the second quarter due to normal seasonality. And as the year progresses, we anticipate further reduction in spend as the OneAmerica integration work concludes and the organization transitions to steady-state operations.

Turning to flows. Our outlook for flows remains unchanged. We expect strong net inflows in the second quarter and full year, supported by healthy retention and a robust pipeline. The first quarter commercial result was primarily timing driven and as expected. Reinforced by disciplined execution, Retirement is delivering strong profitability and is well positioned for continued growth.

Turning to Investment Management on Slide 8. The business's differentiated client-focused solutions continue to deliver investment performance and financial results. We generated $46 million of adjusted operating earnings in the first quarter, up 12% year-over-year and up 8% on a trailing 12-month basis. Overall net revenues drove to the result, supported by higher Institutional and Retail fees. Our trailing margin of 28.6% and reflects the benefit of these higher revenues and expense discipline.

Net flows were positive in the first quarter, and the pipeline remains healthy. In Institutional, we continue to see strong demand from clients for private market strategies, including private fixed income and commercial mortgage loans. Clients continue to value high-quality investment-grade private credit solutions where we have a long track record, and we see structural demand for the asset class.

In Retail, international demand for our differentiated income and growth strategy remain resilient, which helped to offset industry-wide headwinds in the U.S. market that affected domestic flows. Over the past year, we generated approximately $7 billion of net inflows. And with a healthy pipeline in place, we remain confident in building on that success and driving strong organic growth at attractive margins in 2026.

Turning to Employee Benefits on Slide 9. We continue to execute a deliberate strategy to expand margins which has meaningfully improved run rate earnings and employee benefits. Our progress is clear in both the $63 million of adjusted operating earnings we generated in the first quarter and the $169 million we reported over the last 12 months. The key driver of the year-over-year improvement was strong net underwriting results.

In Group Life, claims experience was favorable in the quarter, driven by lower frequency and severity. And in Voluntary, results are tracking in line with our expectations. In Stop Loss, the actions we've taken with underwriting and risk selection have us well positioned to return margins back to target levels. In the quarter, we released $25 million of reserves. 2024 is now behind us, which drove the majority of the reserve release. We also released a portion of the reserves for the 2025 blocks as experience improved in the first quarter.

We are now over 90% complete with the 2025 business and are well reserved heading into the second quarter. The work we did last year has positioned the 2026 business for meaningful improvements. We strengthened the team with new leadership and specialized resources, improving risk selection through more selective quoting and deeper clinical reviews.

That discipline, combined with an industry-wide repricing environment and increase in RFP volumes helped drive approximately 24% rate increases while keeping in-force premium flat. With pricing and underwriting actions now firmly embedded, we are on a clear path to restore Stop Loss margins back to long-term targets.

Looking ahead, our first quarter results reflect continued progress in improving earnings power, and we remain confident in the path to further margin expansion and Employee Benefits.

Turning to Slide 10. This was another strong cash flow quarter as excess capital generation was approximately $200 million. We continue to convert cash at 90% plus levels. In the quarter, we returned approximately $200 million of capital to shareholders through a combination of share repurchases and dividends. And we are executing an additional $150 million of share repurchases in the second quarter, underscoring the durability of our cash generation.

Our business mix and earnings growth are driving a return on equity of over 18%. In summary, our balance sheet remains a strength supported by durable free cash flow generation that positions us well to drive long-term shareholder value across a range of market conditions.

Turning to Slide 11. This view looks beyond any single quarter and reflects how execution supports capital deployment over time. We've steadily grown dividends over the past 5 years, and at the same time, we've returned significant capital through share repurchases. This has reduced diluted shares outstanding by roughly 14% since 2022.

Our ability to consistently repurchase shares allows us to increase dividends each year while maintaining a payout ratio of approximately 20%. Importantly, these returns have been balanced with ongoing investment in our business to enhance customer and client outcomes and support future business growth.

In closing, we delivered a strong quarter, driven by consistent execution, high free cash flow and disciplined capital deployment to create long-term shareholder value. We're executing on our strategy, and our priorities are unchanged: grow the franchise, maintain balance sheet strength and return excess capital to shareholders.

With that, I'll turn it back to Heather.

Thanks, Mike. Turning to Slide 12. Looking ahead, our priorities are clear and compelling and are driving tangible financial results. We're growing excess cash generation while maintaining balance sheet strength and flexibility. We're advancing commercial momentum across Retirement and Investment Management, and we're laser-focused on realizing additional margin improvement in Employee Benefits. Together, these priorities define how we run the company with unwavering focus on creating long-term shareholder value.

Before we close, I want to share that we are encouraged by the recent legislative and regulatory momentum that is expanding access to retirement savings for Americans who have historically been underserved, especially workers at small and midsized employers who have lacked a clear path to workplace savings. These policy initiatives include coverage mandates, mandatory auto enrollment and protections for caregivers and nontraditional workers. These important measures will help address the overwhelming need for additional retirement savings, particularly among the most vulnerable segments of our workforce.

Voya is a leader in providing retirement security to the American worker and their families. We welcome these policy developments and are among those companies best positioned to serve the growing demand for financial solutions that will allow more Americans to retire securely.

I want to thank our employees who relentlessly work to create better financial outcomes for the customers and clients we serve, which is always our #1 priority. We remain focused on executing our strategic priorities, returning capital to shareholders and driving outcomes for our customers over the long term and across market cycles.

With that, I'll turn it over to the operator so we can take your questions.

[Operator Instructions] Our first question is from Bob Huang with Morgan Stanley.

My first question is actually on the Group Life business. Group Life loss ratio was very favorable, 70.6% versus a long-term target of 77% to 80%. It's been trending fairly favorable over the past 4 quarters and the industry does look like that's where things are going. Can you maybe talk -- give us a little bit more detail about what you're seeing there?

Generally, first quarter tends to be the worst quarter for the loss ratio for Group Life. Are we thinking that 77% to 80% maybe isn't where we're going to land this year? Can you maybe give us a little bit of color on that?

Bob, it's Mike. Yes, look, I think you're thinking about it right. And we do typically see Group Life is running a little higher than the 77% to 80%, Q1 usually is the worst mortality quarter for Group Life. So we're certainly very encouraged by what we're seeing in the quarter and has been a good trend for us. We're spending a lot of time. We talk a lot about Employee Benefits and the margin expansion there.

Group Life is another area we're focused on. I think it's a little early right now for us to suggest, hey, we think there's going to be a lower loss ratio for the balance of the year. If you factor in the first quarter, from a calendar year perspective, certainly, we would expect to be better than the 77% to 80% given the result in the first quarter. But right now, I think the base case is back to range in the second and third, fourth quarter.

Okay. Got it. Really, really helpful there. My second question is on the net flows. You gave some decent color in terms of where things are going. But if we think about the Investment Management, right, net flow was about -- net inflow is about $65 million for the quarter. If we're thinking about a positive flow, we're looking at probably $6 billion or $7 billion of net inflows in the rest of the year. Is that ballpark sound about right? Like can you maybe give us a little bit more color on how we think about the Investment Management flows going forward into the rest of the year?

Sure, Bob. Yes, this is Matt. I'll unpack that a little bit for you. So looking back, the trailing 12-month number is right in that ballpark that you referenced, that's a $7 billion number and that's a roughly 2% organic growth rate for the trailing 12 months.

So as you acknowledge, as we mentioned, the flows in the individual quarter this quarter were a little light. But as we look forward, our confidence around maintaining that growth level is driven by -- in the Institutional space, our continued strength in insurance. We saw actually a good first quarter in insurance, and we have good visibility into the second quarter and the rest of the year in insurance. And again, that's a channel that's demonstrated really nice growth over recent years, differentiated value prop and one where you can see volatility quarter-to-quarter, but feel very good on the forward look.

More broadly on the Institutional side, we see opportunities we've been working on for some time internationally on the fixed income side. And then domestically, CLO creation is likely to improve into the second quarter and the rest of the year. On the Retail side, a little bit more detail there, the income and growth franchise internationally, we've called out -- Mike called out in his remarks as well. That continues to be a stalwart for us, nice performance, first quarter. We think that continues for the year. Where there was some volatility in broader equity markets where we had market volatility was in thematic equities internationally.

We're already seeing with stronger markets in the second quarter, some bounce back there. We'll see where that ends. Obviously, a lot of dynamism in the broader markets. But broader strength in Retail, including U.S. fixed income makes us feel pretty good about the forward look. Bottom line, the organic growth expectation, the 2-plus percent for the remainder of the year remains intact.

Our next question is from Andrew Kligerman with TD Cowen.

With regard to the Group Stop Loss business, if I'm reading Slide 43 of the supplement correctly, it appears that the 2026 loss pick is 87%. And my sense is, given all the rate increases you've attained that it's a pretty conservative loss pick, and perhaps we could see releases as we're seeing for the 24 and 25 years. Am I thinking about that right? Do I have the number for the loss pick, right?

Andrew, it's Mike. So just maybe first on the reserving part of this. We continue to set reserves on the high end of reasonable outcomes. And so I think you're thinking about it right from that perspective. And what gives us a lot of confidence around how the '26 business is really going to perform or some of the things I mentioned in my remarks, we -- when you look at this from a price perspective, getting 24% on that book of business, we feel really good about that. But more importantly, the work we did last year around just strengthening the teams, ensuring we got the best risk selection and frankly, getting to do that with even more RFPs. RFPs continue to build in Stop Loss.

So we're getting a look at a lot of different things. So this is really the best we felt around Stop Loss in quite some time. We feel good about the '26 business. Stepping back, we're seeing improvement now. That's encouraging, but we think there's more to come.

Got it. And then it's pretty clear in the media we've been hearing about an activist. And the talk has been around their interest in you either divesting of Group Stop Loss and/or putting the company up for sale. So it's been out there. Hate to ask about it. But maybe you could comment a little bit about that.

Andrew, it's Heather. And I certainly appreciate the question. So we're regularly engaging with our shareholders. And at the end of the day, our actions and our -- and how we deploy capital are guided by what is in the best long-term interest of our shareholders, frankly, as well as our customers. And as part of our normal governance with our Board, we're constantly evaluating different strategic options that we can do, frankly, across the whole portfolio to drive shareholder value. But where we have aligned very, very clearly is that the path we laid out 18 months ago in terms of continuing to grow Retirement and Investment Management, where we had a terrific 2025 and are off to a great start.

And importantly, the earnings improvement in Stop Loss where we demonstrated real value in '25 and again, are off to a great start. That's where we have full alignment and sole conviction. And maybe the last thing I'd say, Andrew, on this one is there is no daylight between the Board and management on the strategic path forward. And what we've laid out very clearly in the presentation and what you heard Mike and I talk about in our prepared remarks, we've got tremendous conviction in our ability to deliver on that and drive further shareholder value.

Our next question is from Ryan Krueger with KBW.

I guess I wanted to come back on Stop Loss. Last quarter, you said you expected calendar year improvement. The Stop Loss loss ratio, which was 84% last year. I think just mathematically, if I take your loss pick of 87% and your 1Q loss ratio, it would imply it would be higher than 84%. So the only way to get that is more reserve releases. So I guess maybe just, am I looking at that right? Are you still confident that you'll get calendar year improvement this year?

Ryan, it's Mike. Yes, that's the base case. And maybe just first, like when you think about claims experience and the emergence of the claims that we saw '24 into '25 or what we're seeing now from '25 to '26, claims are coming in faster. When we were in the fourth quarter, we were only 2/3 complete. Now as we look at the '25 business, we're about 90% complete. And as Andrew was asking, we still are on the high end of reasonable outcomes from a best estimate reserving perspective. So the base case, if that gets to more middle, low end of the range, absolutely, we would expect the calendar year loss ratio to perform better than 84%.

One way you can look at that is just seeing where the reserves were set a year ago on the '24 business versus where we have '25 right now, it's a couple of points better. So that's what we're seeing. We're seeing that through April, frankly. If we continue to see that in May and June and in the third quarter, that's exactly what's going to happen.

Yes. And Ryan, it's Heather. The only add that I would have is, I quite honestly have not been this confident on Stop Loss for 18 months. And for all the reasons that Mike laid out, we've got real conviction in our ability to drive continued margin improvement and get this business back to the full earnings potential we know it can generate.

And then this is slightly different, but also on Stop Loss a little bit. Just how intertwined is your Stop Loss business with the Voluntary and other Group products in Employee Benefits? In other words, as you've been pulling back on Stop Loss to reprice the business and improve profitability, like to what extent is this having a negative impact on the growth of the other product lines in that business? Or are they not that interrelated at this point?

Ryan, it's Jay. I'll take this one. We see Stop Loss right now as another important risk transfer solution. It is rising in demand from our employers. And while we're not seeing Stop Loss and maybe broader Employee Benefits in a bundled sale today, it is another important solution for our employers. And even more importantly, for brokers who are actively looking to grow their Stop Loss books, given the heightened demand in the market.

So Stop Loss, we see it as a door opener for new brokers who are entering the space as the demand is increasing, but it's also driving tighter alignment and value with the existing Employee Benefit broker relationships. Since I joined 16 months ago, we've been focused on the workplace strategy, structure and the people, and I couldn't be happier with the new workplace leadership team specifically for Stop Loss, we focused on bringing in strong leaders with deep expertise. And what you're seeing today is a really tight flying formation with our leaders in risk, pricing, underwriting and distribution. And as you can see in our results, the new team is already driving meaningful change.

Our commercial momentum and results, as you referenced and talked about the impact it's having in our Employee Benefits business, Employee Benefits sales were up 8% year-over-year, with persistency remaining strong. In our Supplemental Health and Voluntary business where we continue to grow from a top 3 provider position, we're really pleased with the results to start '26. Our pipeline is up 10%. Sales are up 13% over prior year, and that's resulted in a block growth of 4%.

So overall, the positive commercial momentum we're emerging in Employee Benefits, and what we're seeing is this connection point on additional risk transfer and Stop Loss is deepening our relationships with our intermediaries and our customers.

And Ryan, if I can just add -- it's Heather. It's again -- maybe 3 additional points on Stop Loss and why it's so important is, first, we're seeing increasing demand from employers for Stop Loss. RFP volumes are up 200% year-over-year. And it just goes to -- there's a real need in the market for this, but there's also limited supply. And why that's so important is, if you think about that increased RFP activity, we can continue to be selective when we're doing our underwriting. But that limited supply also holds up on the hardening market and our ability to get pricing for this business.

Our next question is from Pablo Singzon with JPMorgan.

First question is for Mike on Stop Loss. You had mentioned that Stop Loss claims are coming in faster. Is there something you changed in your operations that's driving that? Or is it claim amounts just being larger and therefore, hitting retentions faster? I think one of the difficulty with Stop Loss is your excess position, but I was wondering if you're getting better line of sight into the claims even before the break retention levels.

Pablo, yes, I think it depends if you look at it from a reported or paid perspective. If you're looking from a pay perspective, absolutely. The operational effects matter, and we are turning through claims faster. We've got more people. Jay just talked about the talent we brought in, we're excited about that. It's really what we're trying to get at more is around the reported side. And what we're seeing from '24 to '25 and now again, '25 to '26, where the claims experience has come in faster. We've talked a lot about cell and gene therapies. We talked a lot about the severity of claims coming in. And frankly, some of the health care providers are trying to move that through the system because they're thinking about their P&L faster.

Stop Loss is a tail product. We would typically see that more on the later side. '24 to '25 was the first time we saw that. And so now -- and we were sitting here in the fourth quarter, only 2/3 complete with experience. We weren't sure if that was necessarily going to be a trend once again. So you're certainly going to want to be on the higher end of the best estimate range being put in that position. I think the good thing now that we're 90% through, we're seeing that again. We think this is the new normal coming out of COVID and so we're post-COVID. And so I think that's a good thing. Again, we're running a couple of points better when we look at it from a reported perspective, year-over-year, you can see that through the reserves and the disclosure. I think that has us feeling really good.

And again, April has us feeling really good. And this is as Heather was mentioning, it's a big part of the cash generation expansion story for us in '26 and beyond. So we're really looking forward to letting the experience speak for itself, and we expect it to in the balance of the year.

Yes. And my follow-up is also on Stop Loss, right? So taking a step back, I think if you just look at stat results, for example, the other insurers you compete within the market have historically reported loss ratios in the low 70s. You've run high 70s, low 80s, which is fine in a more normal environment and then you have the health insurers that run much higher. I was just wondering that just given the experience of the past couple of years, if you think that entails a change in your approach to pricing, just given the fact that maybe there's more volatility in this business more than you had previously appreciated, right? And maybe running at an 80% loss ratio is not the right level considering the volatility.

Pablo, look, I think you're thinking about it very similar that we do. I think maybe just the only caveat too is that sometimes when you're looking at other companies, they do have captive businesses that's different than more the fully insured Stop Loss. Sometimes that can conflate what you're looking at. But as far as just where's the end state on this, I think we're thinking about it exactly like you are.

Our next question is from Wilma Burdis with Raymond James.

From some of the health care insurers' 1Q '26 reporting, it sounds like medical trend is moderating somewhat still high. And of course it's been unprecedentedly high over the last couple of years, but maybe rising at a more modest pace. Are you seeing any of that? And just talk about what you're planning for this year.

Yes. Wilma, we're definitely seeing a bit of that. I think it's really early. I think it's a good sign. Yes, if you look peripherally at some of the health care companies out there, you're definitely seeing some of the turnaround there. That's very encouraging for us. It's really early, though, for us to just, in any way, declare that, that's going to come through results in a big way. But as we've been talking about, the fact that we got 24% on this '26 business, everything Jay talked about on the team, the risk selection we're getting, as Heather mentioned, the number of RFPs we're getting a look at. I think these are all very, very good signs around the trajectory of where this business is headed. And so we're encouraged by that, but we're going to let the results kind of play out, and that will illustrate the progress.

Okay. And then this kind of goes back to Andrew's question on the activist a little bit, but we think Voya's management team is strong and we think you guys are doing a great overall job of running the company. But results were a bit soft across a few important metrics this quarter. And of course, there's a lot of volatility in the market and also medical inflation. But could you give us some visibility into the coming quarters and some of the areas where you plan to show progress on growth?

Yes. Wilma, let me start. And first, appreciate the support and as we think about it, we don't necessarily look at progress on a quarter-by-quarter basis, but really on a full year basis. We are pleased with the results in the quarter with earnings up, but let me toss it to Jay to talk a little bit about the commercial momentum, specifically what we're seeing in Retirement. And I think Matt answered the commercial momentum question. But if not, we could certainly circle back to that. Jay?

Yes. Thanks, Wilma. I'll highlight a little bit what we're seeing in Retirement and Wealth. I think I talked just briefly about Employee Benefits and where we were seeing the growth. I'm happy to answer any follow-up questions on that. As it relates to Retirement, as I referenced last quarter, we expected strong flows in '26 with most of that growth back half weighted.

So as we've had visibility into the planned first quarter outflows, which are largely timing-driven in OneAmerica, and due to a known single large plan outflow, we equally have visibility into the known plan implementations in '26, and that's going to result in positive net flows, not only in quarter 2 but for the full year. So our full year '26 outlook is unchanged. We're on track for a fifth consecutive year of positive organic DC net flows. Now it's worth noting our sales momentum remains solid across our key segments. So in large record keeping, our wins are scheduled to begin funding in Q2 and Q3. And additionally, in Q1, we saw full-service sales in emerging markets, which is an important market for us, up 13% year-over-year. And in government, where we are a leader, we were up 200% year-over-year.

So in addition to all that, I also look at planned retention and seeing that our planned retention was over 95%. And a reminder, this includes the expected impact of OneAmerica surrenders, all of that speaks to the strength we have right now with our sponsors and intermediary relationships. So overall, in Retirement, I'm seeing really strong commercial momentum for the business in '26 and if I kind of translate that over to Wealth Management, where we're starting to see early days in the build, but I'm starting to see success.

So when I mean success is, I'm pleased with the team and they've achieved some meaningful growth year-over-year of 12%. That's both on a revenue and an asset view. In addition, we've seen real strong adviser productivity particularly, those that we've onboarded in '25 and '26 as we've been stepping up our recruitment of advisers. The step back here on the Wealth Management build is that it is embedded in the Retirement business's strong 39% margin. This is a really solid result.

Now our clients are increasingly asking for more advice and guidance at the workplace. We're really well positioned to fill this demand. And overall, I'm pleased with Wealth Management builds and the overall growth, particularly in the alignment with our Retirement business.

And Wilma, if I can just add one other perspective from the enterprise, if you kind of think about the collection of points have been made today about commercial momentum in Investment Management, the confidence we have in the Employee Benefits earnings outlook, the Retirement that Jay just talked about, all of those collectively give us the confidence in us further growing cash generation. Which is one of our #1 priorities and our commitment to returning that capital to shareholders.

Our next question is from Tom Gallagher with Evercore ISI.

Just a few follow-ups on Stop Loss. So Heather, if I listened to your comments about everything, including the activist and the way you're thinking about things, is it fair to say that you think Stop Loss is a core part of the long-term Voya franchise? Or is that something you would consider divesting if the situation was attractive enough?

Yes. So first, thanks for the question. What we have talked about is that we see the earnings improvement in Stop Loss as most immediate source of value creation for shareholders. Right? We've already made great progress with $100 million earnings improvement in '25 on a year-over-year basis and the $140 million earnings improvement on a trailing 12-month basis, if you just look at the first quarter.

So it is very valuable for us in terms of that earnings and the cash generation. Now if you think about it more broadly across the portfolio, what I would say is we see this as a real valuable part of our portfolio. And it goes to some of the points we've made earlier is, first, there's a lot of client demand, growing client demand, limited supply, hardening of the market and the ability to get the price. And we see this as continuing to be an earnings grower for the firm. So at the end of the day, Stop Loss is one where it's going to be value creation for shareholders as also -- as well as a strategic asset for Voya at the enterprise.

Got you. And then just based on your description of what you're seeing, it sounds like you're more constructive on where this business is headed. And I know you're approaching the '26 renewals and certainly '25 renewables is very cautious and more focused on risk selection. As you think about mid-year renewals, are you thinking about leaning into growth now? Or are we still at the part of your process where you need to further risk select and you may not grow yet?

Yes. Tom, I didn't want to jump in and cut you off, but the quick answer on that is no, we're not pivoting to growth. We continue with our focus on margin improvement and Stop Loss and being very disciplined with pricing. And frankly, we're focused on margin improvement across overall Employee Benefits. So right now, it's continued steady as she goes on that margin improvement plan and delivering on the earnings that we know we can deliver with this business.

Our next question is from Wes Carmichael with Wells Fargo.

A couple of follow-ups as well. So just one question on Stop Loss and loss trend. I'm just curious if there's any update on how that's tracking relative to your 24% rate increase and I know you mentioned that claims are coming in faster. Are you seeing any change in trends in the type of claims that are inflecting inflation? And Mike, I think you made the comment that maybe the range of outcomes for the business have kind of doubled, maybe that was the last quarter or the quarter before. Just curious if you still have that view.

Wes, it's Mike. Yes. No. Look, I think, first off, we're pricing everything to get back to target. I think as you just alluded to at the end, as we stood here in the fourth quarter with 2/3 complete. There definitely was a wider range of outcomes. That has narrowed for the '25 block as we get into the first quarter now 90% complete. As I mentioned, we're running a couple of points better than where we were a year ago relative to the '24 business. That's a good sign.

And again, I think what we're seeing in April is a good sign. So if this continues, then we'll see some reserve release in 2025. And I think similarly, we feel well reserved on the '26 business given all the actions we've taken. So we're heads down on it. And as Heather was just referring to, we're going to take the same approach in the middle of the year. And just let the results speak for themselves, and we believe this is going to be a big part of that cash generation expansion story for the franchise at the Voya level that we've been talking about. We're the second year of the journey, and we like where we're at right now.

Got it. And just switching to Retirement during the quarter. It looks like there was some elevated outflows there. I know you spoke to the net inflows for 2Q and the full year, but just curious what you're seeing in terms of shock lapses from OneAmerica in the quarter and how long that should kind of continue.

I appreciate that question. On the OneAmerica integration, if you think about where we are, it's near complete.

We're really pleased with where the retention is landing. So I'd highlight that OneAmerica's retention is embedded into the comments around positive net flows in Q2 and for full year '26. So this transaction has enhanced our scale. It's also enhanced our distribution. And so when you look at the Retirement franchise, talked a little bit about distribution last quarter. We've onboarded the Edward Jones relationship fully engaged in this new distribution relationship.

And then maybe on a completion basis, the team is nearing completion of the final migration wave later this month, which is going to include approximately 3,000 plans. So I'm focused on the team's execution on this integration. The value we're giving for our customers and our intermediaries that we've onboarded through this integration has been really strong. And I think you're seeing the results of that. Really pleased with where we are overall in retention and OneAmerica is embedded in that.

Yes. And Wes, let me just -- I'll hit the finer point specific to OneAmerica, we had always expected to see higher surrenders than our normal book, the shock surrenders through the migration period, which ends the end of the second quarter of this year. So after that point is when we should certainly expect things to moderate, but you are seeing those in the first quarter.

Our next question is from Joel Hurwitz with Dowling & Partners.

Another one on Stop Loss. So Mike, you mentioned you're running a couple of points better on '25 at this point, but I think you might have pointed to the loss ratio on that. Can you just talk about paid trends or paid trends at this point running a couple of points better year-over-year?

Yes. Paid is actually maybe roughly 1 point better. It gets to the question earlier around just operational. Year-to-year, it's one of the things you always have to be careful with on paid. We have -- staffing levels are much higher in '25 than they were in prior year. And so that certainly is going to have effect on paid. So that's why I would point you to reported and why we're trying to anchor you to more of like, think of us about approximately 2 points better at this point in the journey.

Got it. And then just back to Retirement. How much of the full service sort of redemption pressure is OneAmerica? Can you just comment on sort of how the legacy Voya full service book has been performing from a retention standpoint? And then it sounds like the pipeline is very strong for the back half. Any color on the mix between recordkeeping and full service there?

Yes. I appreciate the question, Joel. I think what we're seeing right now is with the OneAmerica kind of planned surrenders that we've seen in outflows, we're still sitting at over 95% retention, which is a really strong number. I think you referenced back half, and I talked a little bit about where we see flows coming in. I talked about it being back half weighted last quarter, positive development. We're seeing some early funding in Q2, we'll be seeing positive flows. And so that's in the mix of business that sits today. I don't think you're going to see a materially different mix of business between full service and record keeping.

Now as a reminder, as we think through this business and providing advice and guidance in wealth management, those recordkeeping plans provide tremendous value to us as we're bringing advice and guidance. And those record -- those plan sponsors are looking for that advice and guidance. So there's value through the ecosystem in those record-keeping plants. But you should see a very similar mix as we complete through the year with a high retention rate. So pleased with where that is. And clearly, a fifth year consecutive of positive flows, you should see that through the end of the year.

Our next question is from Josh Shanker with Bank of America Securities.

Much of it has been answered. I just want to, I guess, one more Stop Loss question. Given that you're marking the new book at 87% combined with double-digit rate increases and 2% premium decline, I'm trying to just better understand the unit volume. And as Mike said, it's being booked for the hope that it's conservative, so it might later yield favorable development. How should I think about that 200, 300 basis point reduction in the benefit ratio against the backdrop of double-digit price increases?

Yes. Josh, I would just think of it as what Heather was talking about. We're just being really, really careful about what we led into our block. And that includes what already exists in our block and then new business that could potentially be in our block. So we're just being very, very careful with risk selection coming out of this health care cycle.

I think we understand that the relative value of a point of margin is meaningfully better than a point of growth. And so to the point around even in the middle of the year, it's the same philosophy. And so we just want to make sure the block is as clean as possible. We think that's the most productive and fastest way to the earnings expansion that we've been talking about and the progress in the second year of this 2-year journey.

Yes. And Josh, this is Heather. I would just reiterate that the kind of the parts and pieces, the 24% rate increase, the reserving on the high end of the range and the strengthening of the underwriting. Those are all the components of why we feel so confident in our ability to get continued margin improvement within the '26 year.

Is there any relationship between policy renewal persistency and the potential for adverse selection and you putting up such a conservative mark? I mean, with these amount of rate increases, presumably, the year-over-year improvement in the margin should be much, much better, but maybe you're sort of worried that you have a book of business that is at greater risk?

Not really, Josh. Like -- and we -- there's -- not to get too deep into this on an earnings call, but happy to get into it deeper with you afterwards. But we look at the block under just different risk dimensions. So there's parts of the block that are going to get rate increases much higher than 24%. And there's parts of the block that are getting rate increases that are much lower than 24% because we like that risk and we want to keep it on the books.

So think of the 24% as an aggregate, think of us just being very selective around what we like and what we think requires much, much higher rate increases. So it's the right question thinking about it in aggregate, but it's -- we really dive into this to make sure that, again, the block is as healthy as possible.

Our next question is from Suneet Kamath with Jefferies.

I wanted to go to Stop Loss again and specifically the comment about the most value-accretive path is to return it to full margins. Does that imply that you tested the market in terms of interest from external parties when you make that statement? Or I guess, what's behind that?

Yes, Suneet, so if you think about it, as I mentioned, our Board, we're always looking at different options across all of our portfolios. We're laser-focused on the earnings improvement as the most immediate and value-accretive action that we can take for this book of business.

Okay. And then maybe just sticking with the Board, and I appreciate the comments about line of sight -- or alignment, excuse me -- between management and the Board and all the commercial momentum you've shown over the past couple of years, including the first quarter here. But if I look at the stock's PE, it's at a pretty significant discount to what I would consider to be your peers. That occurred or that has come despite the fact that you've exited some risky businesses like CBVA and Individual Life. And that was the case even before Stop Loss had issues. So I guess when you think about these conversations you're having with the Board, I mean, how do you explain that? And what's the path to try to get a better valuation here?

Yes, Suneet, it all comes down to execution, right? You go back and look at the priorities that we've laid out, our focus is on executing every quarter, every year and delivering that shareholder value. And what I would look to the proof points is, first, it starts with how we're delivering for our customers. And our customers are voting with their feet. You look at the commercial momentum, we're coming off 2 record years in Investment Management, strong margins, great investment performance and the confidence we have in continuing to drive that growth.

As Jay mentioned, 5 years of positive flows in Retirement and margins that are industry leading. We've got a lot of confidence in continuing to grow and the proof points that we've delivered already on the Employee Benefit improvement of $100 million earnings improvement in '25 and $140 million on a trailing 12-month basis. And I think the last thing I would kind of lead you with, Suneet, is that the collection of those businesses, I'm going to go back to our focus, which has been on continuing to drive growth in our free cash flow generation and then making sure we are returning that and deploying that into the most accretive opportunities, and that's in returning that capital to shareholders. So we think the collection of doing all of that, Suneet, is going to continue to further drive our share price and the value of the franchise.

Our next question is from Mike Ward with UBS.

I was just wondering, in Retirement, if you guys could give us an update on the inorganic pipeline potential?

Yes. Mike, thanks so much for your question. We've been active. We've been vocal on how pleased we are with OneAmerica, the integration and adding new clients in and delivering over a 30% return on that acquisition. So we're active. We're looking for Retirement roll-ups, but we don't see anything imminent, which goes to what Mike and I have been talking about of the cash that we generate, the excess cash. It's the expectation that we're going to deploy that into the highest value, and that's in buying the company we know, which is Voya through share repurchases.

Heather, and then on the Wealth business, you guys said revenues up 12%, I think. Just kind of wondering like how that is going so far and how much of that is driven by organic conversion versus markets? And just kind of overall, curious like how the reception is in terms of kind of turning on the advice switch.

Yes. And Mike, I'll let Jay cover it. But you're absolutely right. And our focus there is on the revenue growth. And that's kind of the metric that we're looking at for success. But it's been just 10 months since we stood up this office and we're really, really pleased with what we're seeing. So I'll turn it to Jay to elaborate.

Yes. If we look at the Wealth business and you look at where we have a right to win, I mean between the roughly 10 million customers we have through our Retirement business and equal that through our Employee Benefits and Benefitfocus business, and looking at the request for advice in my career, this is probably the loudest employers have been in seeking advice at the workplace. And so when you look at our business, we really are well positioned. When we service our customers the right way through Retirement and Employee Benefits, we build their trust. And that trust translates to the ability to bring that advice to the workplace.

And because that advice is being sponsored by employers and plan sponsors, and we have an existing relationship and an existing solution with that client, we think we have a unique advantage to continue to build that lifetime value for our customers. And that also allows us to connect in Matt's business where he is helping us build some unique solutions in the marketplace. And so I think when you look at the overall Wealth Management business and how we've been building it, we've been building it through recruitment of our advisers. Really happy with the early development and the productivity of those advisers, the tools that we have onboarded have helped us create efficiencies.

And overall, there's more and more demand for digital self-service, which is a future component of our build. So I like where we're at. I also love the fact that, that build is sitting inside our 39% margin in our Retirement business. So overall, a really productive build for us in alignment with where our employers and plan sponsors are looking for on the advice and guidance.

Our next question is from Alex Scott with Barclays.

I do have one follow-up on Stop Loss, so apologies for that ahead of time. I just heard a comment that we're 2 years into a 2-year journey, and I thought that was interesting. I mean that sounds like next year, you'd be back at targeted margins. And I just want to understand if I'm hearing that correctly and the timing associated with that kind of comment. And maybe if you could help us understand like how we get there. Because even if we give you the benefit of the doubt on some of the reserve development, it still seems like we're a decent amount above where you'd be targeting right now. So yes, I mean, do I have that right? And anything you can tell us about the IBNR or something you're seeing to help us put numbers behind your optimism?

Yes, Alex, thanks for the question. I'll start with the thematics and then toss it over to Mike. So you're absolutely right. When all of this started coming out of COVID, and we saw the impact on the broader industry, we've always said we expect this to be a 2-year journey and not something that was done in 1 year. We really, really like the progress. And as Mike mentioned, we're pricing the business to be back within the target loss ratio. So that is certainly the goal we have laid out, and we're going to see how things progress through the year, but we've got confident in seeing that improvement.

Okay. Follow-up question is just related to couple of peers engaged in a merger of equals. I know both of them, I think, were much smaller peers in terms of their Group Retirement businesses specifically, but it does sort of indicate an increasing importance on scale. And just thought I'd get your take on where Voya is situated relative to that competitive positioning. And as a result of some of the peers scaling up, do you see any more fee compression in the competitive environment? Are you expecting to see that?

Yes. First, Alex, frankly, I really love the question because it gives me an opportunity to highlight how our businesses are firing on all cylinders and really the scale that we have across. So if you think about, as I hit on some of these things earlier, retirement, we're a top 5 provider in the space. The acquisition that we did last year with OneAmerica now serving close to 10 million participants. We would not be a scaled provider if we could not operate at a 39% margin for 10 years. So Retirement, really, really like our position. The expansion into wealth management is absolutely the right strategy where we're building on a core foundation. In Investment Management, you think about the 2 years of outpacing the industry in terms of organic growth, delivering strong investment performance.

Our fees are holding up really well. We're improving margins. So all of those to me are signs of scale. And I go back to it's really about the client demand in the market and the fact that we are winning and we are retaining the business and we're delivering for them. Even in Employee Benefits, right? We're still -- you're still seeing sales growth in the core business while we're on this margin improvement plan across.

So we frankly really like our position in the market. And maybe I'd close with it is also buoyed and strengthened by a solid balance sheet, right? We're one where we don't have a lot of noise in our balance sheet. We generate a lot of free cash flow, and we've got scale where we play.

We have reached the end of our question-and-answer session. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

[Audio Gap] the Institutional Investors Conference. I'm here with Voya's CEO, Heather Lavallee; and CFO, Mike Katz. And with that, I'll turn it over for their presentation.

Okay. Good morning, everyone, and thank you, Wilma. I'm going to begin by highlighting what makes Voya such an attractive investment opportunity. And it starts with our complementary businesses, where we operate at scale, which is durable, and we've got a leadership position in the workplace businesses. Now the collection of these businesses generate high return on equity, high free cash flow, and that's important because it allows us to continue to invest in our businesses, deliver for the customers while returning meaningful capital to our shareholders.

I'm going to turn and talk a little bit about our business mix. Simply put, our businesses serve our customers at every stage of life. We offer financial solutions that help from the brand-new employee who is enrolling in their retirement plan for the first time or the employee benefit offerings all the way through to retirement, where people are enjoying the retirement savings to and through and every stage in between. And our retirement business is at the center of the workplace, which is where we operate. And it's complemented by an asset management and an employee benefit business that offers financial solutions to help ensure our customers can secure a financial future as well as protecting against an unforeseen event in life.

If I start with retirement, we are an at-scale retirement provider, we are top 5 in the industry, and we have generated industry-leading margins for over a decade. We have meaningfully grown this business in the last couple of years. In 2025 alone, we added nearly $100 billion in assets. We did that both organically and inorganically. And in the last 2 years, we've grown our participant account base by 40%, and we now serve nearly 10 million participant accounts to and through retirement.

In our Employee Benefit business, simply put, we help employers to be able to manage their overall benefits programs. Benefits have gotten quite complicated. And if we think about what we do for the customer, it's helping the employees and their families protect against unforeseen medical events. In employee benefits, we hold a #3 position in supplemental health and a #3 position in medical stop loss.

And finally, if I turn to investment management. We have breadth and depth in this business. We operate both in the U.S. and internationally in both retail and institutional. And we have meaningfully increased margins while outpacing our peers in terms of organic growth. Now what sets us apart is the financial performance. Return on equity of close to 19%, which has been driven by the strong earnings from our retirement and our investment management businesses and the high margins they generate. In addition to that is the fast-growing wealth management business we have inside retirement. It's also been driven by the margin improvement in employee benefits, and Mike will talk a little bit more about that.

On the right-hand side, our free cash flow is really second to none. 2025 was a great example of this, where we generated 90% free cash flow on after-tax earnings. And if you look back at our track record over the last decade, on average, we have generated a 90% free cash flow over that entire time. And why that's so important is it has allowed us to continue to invest in our businesses do smart accretive acquisitions while continuing to return meaningful amounts of capital to our shareholders. And as we think about 2026 and beyond our focus is on continuing to grow cash generation, deliver for our customers and increase value for our shareholders. Mike?

Heather, when I think about companies with strong balance sheets, and strong businesses, it really reveals itself in how they're deploying capital. And when you look at our track record, both across dividends and share repurchases, we have that. We've been able to increase the dividend each year. You look at 2025, we generated $775 million of excess capital, $775 million, that's a testament of the businesses that we're in. And frankly, when we think about our conviction on dividends, it's because the durability of that free cash flow generation prospectively persists.

From a share repurchase perspective, we view this as an important part of the value proposition in Voya. We look at the first half of 2026, and we've already signaled to the market, expect $300 million of share repurchases in the first half, so nearly $400 million of capital deployment back to shareholders in the first half of the year. The other good thing about this is that as we're buying back shares, it positions us to increase the dividend while maintaining the nominal amount that we're returning through dividends each and every year. So if you look at 2026, we're going to be buying back shares. And later this year, we're going to be increasing our dividend.

If you go to the next slide, and we look at this balance sheet, from an RBC perspective, very strong, well above our target range. When you look at the amount of excess capital that we have heading into 2026, we feel really good about that. And then leverage, right in the middle of our 25% to 30% range. We had over $1 billion of pretax adjusted operating earnings in 2025. Leverage was exactly the same. We did not use leverage to increase earnings frankly exactly the same. We grew earnings over $150 million on the back of the businesses that are growing and delivering so much commercial momentum.

In the middle, when you look at the way we're investing our general account, and by the way, we've got a group of investment professionals that not only do this for Voya, they do this for 70 other insurance companies. And so we feel very well positioned. We know it's volatile out there, but we've come into 2026 in a position of strength, very well diversified. When you think about what we're investing in, very much investment grade. And then the other part about the general account, it's an important part of the value proposition at Voya, because it unlock synergistic value between Investment Management and our Retirement and Employee Benefits business, the Investment Management business earns a fee for managing the general account.

And it's also an important part of the commercial momentum because we're showing what we can do. We're eating our own cooking in our own general account, that's been part of the value that we've been able to deliver to those over 70 insurance companies. Part of the big organic growth we delivered almost $15 billion, $15 billion of organic flows in 2025 in Investment Management. And then it also delivers that durable spread income, primarily in retirement, but also our employee benefit business.

And then finally, on the next slide, when we look at the value prop, we're at Raymond James, obviously, we want to share the investment proposition with all of you. But as I just mentioned and Heather signaled as well, like we're doing the same thing. Like we know Voya better than anybody. We see the valuation opportunity, and we're leaning into it. We're not just asking you to. And you can look across these 3 pieces here, but really at the end of the day, we've got our near-term priorities really moving with pace. We talked about commercial momentum in our businesses, investment management, retirement, Heather talked about that. And we've also talked about the OneAmerica transaction, we bolted on a small retirement company at 30%-plus returns. We've integrated the majority of that in 2025, realizing what we said we'd realized.

And then finally, in employee benefits, which we know there's a lot of questions around that, that we've been getting from investors. We delivered over $100 million earnings improvement in 2025. It's a part of the value proposition as we move forward. And frankly, when we think about the story on Voya, all those questions in the past have driven this valuation discount. We believe the story has moved. EB did not get in the way of an incredible 2025 and the actions we took in 2025 positions us to be able to say the same in 2026. Heather?

Thanks, Mike. And before we open it up for questions, I'll close by just reiterating that we see meaningful near-term catalysts to improve our multiple expansion in our business. It starts with the commercial results we drove in Retirement and Investment Management, where we now serve $1 trillion in combined assets between both of those businesses. Mike mentioned, record flows in both businesses in '25, which creates a catalyst, and then I talked about our expansion in wealth management.

Second is the continued improvement of margins and employee benefits. And finally, it is our shareholder-friendly approach to capital deployment. As Mike mentioned, we are going to continue to deploy capital into the most accretive opportunities and so we believe that our value proposition is clear and Voya is a compelling and attractive investment opportunity. Thank you.

Thank you for the great presentation. Just going to move to a little bit of Q&A here.

First, we'll start with Voya's strong cash flow generation, which has been very impressive. What drove strong results in 2025? And what are the key contributors in 2026?

Mike?

Yes, sure. And it's really an outcome of what I was talking about just a moment ago. We have clear near-term priorities around commercial momentum, organic growth, the acquisition that we did at OneAmerican and then finally the EB piece. So we look at the organic growth in retirement, over $20 billion of flows plus the $60 billion that we brought in from OneAmerica, Investment Management, I just mentioned nearly $15 billion of organic flows in IM, different than I think a lot of other companies out there. We made a lot of progress in integrating OneAmerica. We talked about $75 million of earnings from that transaction. We're exceeding that target.

And then finally, as I mentioned with EB, that margin improvement story. And we grew earnings in 2025 over $100 million. And that's not the end of the story there. We see margin expansion in '26 and beyond. And so we continue to make progress. That's going to be part of the value proposition in '26. And that $775 million that Heather and I talked about, we expect that to be higher this year and for the years to come.

Yes. And the only thing I would add is we've always had an approach of being really disciplined with expenses, which gives us the opportunity to reinvest into the highest opportunities within the business.

Great. And could you talk a little bit about what makes the industries you operate in appealing?

Yes. So if you think about the businesses we're in. So first, in the retirement business, we're going to have roughly 100 million millennial and Gen Z workers in the workforce. And it's going to be one of the largest wealth transfers, $84 trillion of assets that are going to transfer to the next generation. So we see that as incredibly attractive. The other piece of it is that if you just think about the retirement and then the overall benefit landscape, it's gotten complicated. And if you think about the U.S. worker, they've got to make close to 20 different decisions every year in their benefits. And that's difficult for people. I think about my adult kids that are enrolling in their benefits and they call mom and say, I'm not sure what I should do.

So being able to offer guidance and benefits of the workplace, which is where most employees are looking for trusted advice is key. We love that. And then finally, in Investment Management, we continue to see a traction for the U.S. dollar-denominated funds in Asia, and continued growth of not only accumulation vehicles, but income-generating vehicles and retirement.

And could you talk a little bit more about why Voya is competitive in these industries?

Yes. So I mentioned a little bit, again, I start with retirement. You have to be a scaled provider in this business. And why that's so important is it allows us to continue to invest in capabilities, digital, cybersecurity to be able to deliver for customers but operate at industry-leading margins. Otherwise, you just -- you can't have both together. So that's number one. We've got an incredible brand, we're well-known, great distribution, same in employee benefits. We are viewed in the market as a workplace company. We're not just a wealth manager who happens to do workplace along the side, this is our core business, and that is important in -- within the markets that we serve.

And then finally, I think about Investment Management and it goes to something Mike mentioned, as an insurance-owned asset manager that manages their own general account, the fact that we can take that to 80 different insurance clients that we serve, we think about the breadth and depth, the strong investment performance. We've got a reputation and we've delivered for our customers across all 3 businesses.

How are your businesses working together to serve your customers?

Yes. So this is one, and we love the collection of the businesses. And so if I think about it, first, for employees. Today, employees need advice and guidance. And more and more, there's an interesting trend in the workplace where 5, 7 years ago, employers would say, I just want you to be my retirement provider, and I don't want you to offer retail planning and other solutions. Today, they're asking for those services. So the fact that we've got 10 million participants in retirement, we've got close to another 10 million through employee benefits. We're able to leverage that access to the workplace and bring broader advice and planning into the employees. So broader advice and planning, so really, really complementary.

We're also able to take the proprietary solutions, we manufacture in our investment management business directly into our clients. And then as Mike mentioned, we talked about managing our own general account. That is an incredible asset for us to be able to take that, drive yield and returns for institutional clients at the same time, driving strong earnings growth for Voya.

And could you talk a little bit about your strategy to drive medium-term growth?

Sure. As we think about it, I'll hit each of the businesses quickly. In retirement, it's about continuing to grow organically. Mike mentioned over $20 billion of flows last year was actually $28 billion of organic flows. We also want to be opportunistic about doing additional bolt-ons like we did with OneAmerica. Right now, we've got a really high bar for that just given where we trade in the market, but we see that as an attractive opportunity. And then finally, it's the build-out, the thoughtful build-out, we'll do -- we're doing of our wealth management business. In employee benefits, it's all about continued margin expansion. And then finally, Investment Management, it's continuing to leverage the growth that we've done within the insurance channel, privates and alternatives as well as global expansion. Our clients are really looking for income solutions.

And organically, just to build on Heather's point, like we do see continued consolidation in the retirement space, and we see us as a company that can participate in that. We are going to be looking for returns well north of 20%, factoring in how we see the execution risk of a particular opportunity. And part of it is just, Heather, as we've talked about just a moment ago that we -- there's a retirement company, a workplace company, we know better than anybody in Voya. And so buying back shares, the bar is very, very high right now.

Why we talked about $300 million of share repurchases in the first half is because we don't see anything imminent in the near term that would take us off course of returning capital through that dimension. But the other thing that's important too, and something that Heather and I take really seriously is that we believe that it's important for us to continue to be in the market buying back shares. You should expect that for the foreseeable future. But we can do that and still participate in retirement opportunities.

We structured a deal where there was a small upfront with an earnout. Those are the kind of things that we're going to do that if we see a really good opportunity and we want to be able to both take advantage of that opportunity, but continue to take advantage of valuations, we're going to find a way to do both. That's really, really important to us. And we feel like we've got the strategic flexibility based on where the balance sheet right now is to take advantage of that.

How do you approach wealth management to retain assets as boomers approach retirement?

Yes. So with Wealth Management, I think what's first important to notice or to mention is that we already have established wealth management business inside retirement. Today, it has generated $200 million of revenues in '25 which is roughly 10% of our broader retirement business. So we're building from a strong foundation. But what we realized was we frankly did not have enough advisers to be able to serve those clients. And we weren't getting to all of the inbound calls of people who wanted to roll over into an IRA or consolidate assets.

So the first thing we've done is we've expanded our phone channel reps. Ultimately, we want to get to, say, 500 to 700 advisers over a period of time gradually. We probably sit at about 200 today. We've got about 450 field-based advisers that have for probably 30 years supported our tax-exempt clients very holistically. So helping them make decisions around should I roll money in? Do I need to have an annuity? Should I roll money over? So that's a key component is adviser expansion. We're also investing modestly in building out digital self-service. And while we're attracted to baby boomers, our real focus is on serving millennials and Gen Zs because most Americans do not have access to a financial adviser.

And we're not going after high net worth individual. We're going after the average American that we are serving today in our workplace businesses who need these solutions and are looking to their employer and be able to have digital solutions to be able to address those needs. So that's really how we think about it. And then maybe the final bit is we also have proprietary products that we sell through third-party distribution. And that's been an important component as well. Think about that as more of a mutual fund IRA products. We've had a real track record of delivering value for clients in that space as well.

And Heather, I think one of the challenges is the CFO is investing, investing in fact, you know revenue growth is so critical. I think one of the things that we have a privilege at Voya is that key investments like wealth management, which we see as an important part of expanding the retirement revenue growth over time is that we're able to self-fund the majority of these investments. So at the same time, we're making the critical investments in technology, growing our adviser base. We're also finding the efficiencies within the company so that it's not taking us off course in what we talked about earlier on growing excess capital, which leads to the strategic flexibility, which leads to the value proposition we talked about a moment ago. So just to be clear, like we're able to do this while still delivering on the financial goals that we have.

Yes. And maybe one other bit, and then we'll move back to you on the wealth management. One of the reasons we think it's so attractive is this is fee-based business, capital-light, it's fast growing. And again, you think about the modest returns, we don't have to really overstretch what we think is possible to have a meaningful impact in what we're driving. So when we think about this, think about double-digit revenue and earnings growth at the same high margins we've generated in retirement. So we think really accretive and over time can help drive that multiple expansion.

And can you maybe talk a little bit about any tech advantages or AI and how you can use that in the retirement segment. Just talk about -- is that something you could see helping the margin going forward?

Yes. So first on tech advantages, one of the things that is not always fully understood is our retirement platform is built on a technology called Omni. And what makes it unique. There are some providers who will say, we have a proprietary record-keeping platform. Well, we don't need to have a proprietary record-keeping platform because we work with the largest in the industry, but we also -- we own the source code. We actually have more omni developers than FIS that owns Omni. So it is an important leverage point for us where -- when there are certain things that are coming in as regular updates, we leverage those from Omni, and then when there are other things that we want to do our own specific code to meet client needs, we can do that. So that's actually been a competitive advantage for us.

The second thing I'd mention is we have a global capability center in India. And this is not about labor arbitrage. This is actually where a lot of our technology advancements come from. So this kind of goes to the point Wilma, it's been an important leverage point for us to be able to maintain those high margins I talked about in retirement for a decade. So that has set us up well to be able to lean in on AI. We were one of -- we were the first actually retirement provider with a transactional mobile app capability close to a decade ago. We have had behavioral finance Institute, which helps people make smart decisions around the retirement and where to allocate those dollars.

And so when we think about AI, we're going to be leaning in on things that drive easier RFP processing, things around claims, things around the way we're driving operational efficiency. So we do think this is going to be an important leverage point for us to continue to deliver a better experience for our customers while driving efficiency. Call center is another great example. We've had chat for a number of years. It's very natural to be able to move into natural language conversation with our clients to give that first call of resolution in a very efficient manner.

And you're not going to hear from us like, oh, here's this big cost takeout because AI that you're not going to hear that. We're really focused on is the education and the adoption within our disciplines in our company. So while we monitor at the top, we think it's really important that the individuals within each particular function understand the new capability. It's moving really fast. We're training our folks in a very tailored way. So the folks in the finance organization are getting trained differently than the folks in the sales organization. They are getting different training in the underwriting side because they understand what they're trying to do every day. right? There's not a one solution fits all here. They understand the data that's necessary to understand what the customer needs that they're trying to serve.

And so we're really trying to enable our people to be able to understand how they can take advantage of it and then fund it. But to the point earlier around whether it's wealth management or other key areas that we want to invest in, we think, from a productivity and an efficiency perspective, that this is going to be one of the tools that's going to allow us to continue to invest for growth as we maintain strong margins in retirement, in investment management and then that expansion in EB.

Great. And could you talk a little about some of the biggest opportunities in the Employee Benefits segment as well?

Yes. So one of the important opportunities right now, we have launched leave management capability January 1 of this year. And why that's so important is administering and managing employee leaves is incredibly complicated for employers. You've got federal leave, if you got state leave, you've got paid, you've got unpaid and being able to have a capability that creates a very easy interface for employees through the digital as well as proper reporting for employers is very important. And why we did that is because more and more the insurance provider that wins the leave is winning the bundle. They're winning the life, the disability and the supplemental health. So that's incredibly important.

And as a #3 provider in supplemental health, we want to both that position, but continue to accelerate it. And then the second I'd mention is just high cost of health care. This is something we're all facing, right? We saw a rebound in the cost and utilization coming out of COVID, employers are struggling to figure out how do they absorb the high dollar medical expenses and their overall benefit program. And so having medical stop loss, which is essentially a reinsurance layer for those employers that are self-insuring their medical is an important lever for them to help them control costs. At the end of the day, it's about serving employees, it's about providing the right benefit offering and about retaining and attracting those workers.

Can you touch on where you're different in the investment management?

And I can start here. Look, I think one of the things -- because we'll get questions around -- as you all know, I mean you're in this business that it shifts, right? What's in demand and what's not in demand, year in, year out. We don't -- we're not concentrated in any way in where we play. Like we play internationally, Heather mentioned the distribution we have of our income and growth products in Asia. Domestically, we have that both from an institutional and a retail perspective. And so very broad-based in where we play. We're not overly susceptible if something comes in or out of favor.

Investment performance has been phenomenal. I think that's really been key. We have heritage in fixed income. It's part of the reason why we do so much for other insurance companies. So this is -- we've got a track record, Wilma, of really delivering strong organic growth. And when we look at '26, we see the setup being just as strong. Our target is 2% plus organic growth. So that's no macro at all. We expect to grow organically 2% year in, year out. And we don't see anything at this point, even with a difficult backdrop right now, taking us off course and been able to do that.

Yes. And the only thing I would add is that as we think about the wealth build-out bringing proprietary solutions into that channel is important. We launched active ETFs in the fall. We'll continue to expand that, but we're also going to be able to launch model portfolios that our advisers can take to our clients. So it just kind of goes back to that complementary nature of the business.

Great. And could you talk about what you think is most underappreciated about your company or in stock?

Yes. I think what's most underappreciated about the company is a track record we have with this 90% cash flow generation, growing the cash generation, the consistency that we have delivered on returns. We've navigated through different environments. But I think what's underappreciated is the leadership positions we have, the discipline in terms of how we manage that and how we're going to continue to make decisions that are in the best interest of shareholders and growing that value in our belief, we should be a $12 billion market cap company, trading at 12x, not where we are today. And I think underappreciating the fee-based businesses we have, particularly growing and what we've been able to generate in retirement and investment management, which is roughly 85% of the firm are underappreciated in my opinion.

And Heather may, if you went back to the slide on valuation just briefly if you still have the clicker. But I think we get compared to insurance companies, right? And obviously, I think valuations have been depressed there. And I think in some ways, that's fair, right? We -- employee benefits, the benefit business is an insurance business, but it's short tail liabilities. These are not long-tail liabilities. These are not guarantees that sit on your balance sheet for years and decades. These are short-term liabilities that we repriced every single year. Investment management is certainly not an insurance business in retirement has elements with the general account, but we talked about the synergistic values there.

And so part of the reason why we're comparing versus Russell here. I think we think that's a -- it makes more sense in the small mid category and part of the reason we're here at this conference because look, there's -- it's inertia is a powerful thing. We have had -- we have been an insurance company in the past. We had a life insurance business. We had a big variable annuity business back in the early days of Voya. And those businesses we've divested, and what's left has been done in a tailored way in a way that really works in a synergistic way in the workplace, but really is not insurance in the way that I think most people think about it. And I think that's part of the reason, Wilma why where we're trading is probably not fair again. We think it's yesterday's story, and we're pretty excited to tell today.

Well, and if I can close with just some key stats and you think about what we delivered in 2025, record commercial results in Investment Management, $15 billion of flows, $28 billion of flows in Retirement, $60 billion of additional assets in an acquisition with a 30% IRR, over $1 billion in pretax earnings, 20% EPS growth, significant cash generation, right? I think those are incredible stats. We've got confidence in our ability to deliver going forward, which is why we've made the commitments on the share repurchase, why we've expanded the dividend and we're confident in our leadership team and our ability to continue to grow and deliver for shareholders.

Great close. Thank you very much, everyone. Appreciate it.

Thank you Wilma.

Thank you.

All right. Thank you, everyone, for being here with us. I am Michael Ward, North American Life Insurance analyst at UBS. Very happy to have Voya with us today. We have Heather Lavallee and Mike Katz, CEO and CFO, and we're very excited to be here today. So we'll get right to it. I figured, Heather and Mike, we could start with some key messages after the 4Q into '26.

Yes, I'll start. And I think the first is that we had an exceptional year in '25. You look at what we achieved from significant growth in cash generation, $775 million, significantly up from the prior year. You look at the record commercial results that we drove in our retirement and our investment management businesses, where we now sit at a combined $1 trillion of assets between those two businesses. We had record earnings growth in our retirement business, and we made a significant improvement in our employee benefits margin. And so that carries a lot of momentum for us.

As we think about -- second major point is we see a significant opportunity to grow our cash generation into 2026. So that momentum that we delivered in '25 will carry us into 2026, really fueled by the commercial growth in Retirement and Investment Management and the ongoing improvement in margins in Employee Benefits. The third main point I'd highlight is the fact that we have a really strong balance sheet and highly cash-generative businesses. And that gives us a lot of flexibility as we think about how to deploy that capital into '26.

Mike and I have talked about on our call and in follow-on meetings that we are deploying more capital towards share repurchases in the first half of the year. We've talked about $300 million in the first half kind of equally split between first and second quarter. But that does not prevent an opportunity for us to be able to do a retirement roll-up.

We've been very clear on our focus of consistent cash generation and return back to shareholders while still creating optionality for us if we see another opportunity like OneAmerica, which we were really pleased with how we delivered. So I think I'd wrap with we've got a really clear and compelling value proposition for investors, complementary businesses, highly cash generative and a really strong balance sheet as an organization.

Great. And I forgot to mention anyone on the line, you can submit questions virtually, and we can take them towards the end and of course, anyone in the room as well. But thank you, guys.

So I figured we could start with the core retirement business, strong commercial momentum, record net flows. I thought we could dive into your strength there in '25 and what you're seeing into '26.

Sure. Yes. As you think about our retirement business, again, our largest business, we've overachieved on the margin targets for the last couple of years. So last year, we delivered close to 40% margin, which is above the 35% to 39% guide. As you mentioned, Mike, we had record organic growth, $28 billion in flows, and then we added the $60 billion of OneAmerica flows on top of that. So you just think about that growth of close to $90 billion of assets. We added close to 2 [ billion ] participants. We're sitting close to 10 million participants. And so we just think this is a business for us where we've got a lot of scale. We've got a lot of commercial momentum.

Our retention level remains really strong. And as we think about the investments we're making in wealth management, that allows us to both fortify but continue to be able to grow the business and serve our clients much more holistically as we continue to scale and grow that business.

Yes. We -- you're not going to hear from us talking about big expense takeout programs. It's not really what we had planned. What we have planned is just consistent discipline around how we run the franchise. And retirement being the biggest business, obviously, we see opportunity there. And to Heather's point, I mean, it's why we're seeing margins above our target range. I mean, certainly, a lot of success around the OneAmerica transaction. We're moving into year two. So that piece is going to give us the ability to get into even more integration and opportunities. So that allows us, to Heather's point, to both invest for growth at the same time, we're maintaining strong margins and growing earnings.

Maybe just on OneAmerica. I think that was a pretty solid deal and a tremendous add for you guys. Just kind of wondering any key learnings so far? I do wonder if we could go into maybe the potential for other assets out there that might exist similar to OneAmerica, but maybe we could dig into that deal a little bit.

Yes. I'll start and Mike can certainly add. So if you think about OneAmerica, we had set out targets of $200 million of revenue growth, $75 million of earnings, about 90% plan retention. And we have significantly exceeded the revenue and earnings targets we set. But I think even broader than that, so we achieved financially, we did -- the team did an excellent job with the integration. So we are at the point right now where we've done two of the four integrations completed. The retention is incredibly strong from those. We've got clients that are really pleased with the additional capabilities that we've added to -- for them, just being an at-scale retirement provider. But we've also added new capabilities for clients, the ESOP plan. We've added distribution through the Edward Jones relationship.

And so this is something that not only had over 30% unlevered returns for shareholders, but it really positioned us in the market to be viewed as a net consolidator and a firm that is going to be growing in the space. And so that's something that has resonated with clients and advisers. And I think as we look at opportunities for more on OneAmericas, we're certainly active in the market. We see that if you think about the industry as a whole, it is in secular consolidation, right?

There are roughly 60 different retirement providers and the top 10 control 80% of the assets. And we squarely sit as a top 5 provider. So we are truly a grower consolidator. And those bottom 20, it's going to be very hard to continue to compete. So we do see opportunities. Maybe the final thing I'd mention is that we do have a very high bar for M&A, right? Obviously, OneAmerica was really a terrific acquisition for us. We want to make sure we're disciplined and you can never necessarily control timing. So we're active. We're going to be disciplined, and we're going to look for more opportunities to do further roll-ups.

I mean, Heather, you hit it all, right? I mean the only thing I'd be doing right now is just reinforcing it. I mean, tremendous returns out of this opportunity for us. And I get excited because we're into year two on this. So there's going to be more things that get unpacked by the teams as they have the opportunity to further optimize the asset. And then, Heather, to your point, like we're going to be incredibly disciplined, right? We -- the returns on that particular transaction well above our return on equity. So this is one we felt like looking at the execution risk around this relative to the return made a ton of sense. To Heather's point, there's going to be more opportunity, but what you should expect from us is we're going to be incredibly disciplined about it.

And so when we talked about and Heather just mentioned earlier, the $150 million of return of capital through share repurchases quarter 1, we do it again in quarter 2 is because we don't see anything imminent right now. But that doesn't mean that there won't be opportunities as we move forward throughout the year, especially when there's a lot of volatility in the markets, that tends to shake out some of these opportunities. But we can also participate in those bolt-ons and still return capital at the same time. So that gives us a lot of flexibility.

We feel like we have a lot of flexibility coming into the second half of the year. And frankly, we have the earn-out already set aside. So when we come out of the end of the year with approximately $400 million of excess capital, that includes the earn-out that we expect to pay later this year.

One of the things I'm kind of wondering is, so record keeping is consolidating. There's some competitors that are more actively trying to consolidate, but there's not a ton, right? So I'm just curious, how that competition has developed for these targets?

Yes. I think there are some that are really just looking for a large-scale acquisition, right? We've seen a number of those over the past 4 or 5 years where they're sizable. So I do tend to think that the very large want to do something that is of a significant takeout. I think for us, we're more uniquely positioned to pursue the bolt-ons because if I go back to OneAmerica, one of the reasons why we were the -- we were the one who kind of were victorious in being selected for that is we had a good relationship with OneAmerica.

And they wanted to have a really good home for their clients and for their employees. And so the culture matters. So that's something where when we go through these and we treat people well, we executed really well on the technology migrations, positions us well to be able to do more of those. And so I just think there's going to be different types of buyers in the space. And it's one where people are going to, I think, continue to be disciplined around it. But I just think that you've got some focus on the large end and not as many that are going to be focused in on the spot where we're pursuing.

Okay. So maybe on the next sort of stage of the retirement phase, but wealth, I think, is an exciting area of focus for the industry, specifically for you guys. Wondering if you could maybe give a quick rundown size and scope of your wealth business today.

Sure. Maybe I'll start and then maybe Mike can hit on the investments and the returns. So first, one of the things we want to be very clear on is our wealth management business is an established business. So we talked about on the call, $200 million of existing revenues that are coming from retirement. You think about that as roughly 10% of that business. And so we're not building from greenfield. And I think that's a really important point. As you think about where we're growing and why we think we're uniquely positioned, when we talk about 10 million participants in retirement, 20 million across the workplace, these clients are looking for support, advice and guidance from us.

So we've got a bit of a captive audience. And what has been a limiter is just the number of advisers being able to scale and reach to serve those clients. So for us, making thoughtful investments to grow our field and phone-based advisers is going to allow us to serve those clients in a broader way. And again, they're looking for us to do this. We also don't have distribution and acquisition costs the way some other wealth managers do where they've got to go out and really try to generate the leads. We have this existing population for us. And maybe the last bit, and I'll toss it over to Mike, is we're being incredibly thoughtful as we think about the investments, how do we fund those and what we expect to get from returns from this business.

Yes. And to that last point that Heather referenced, we view this as a business that's going to be at or better than the margins we report in retirement over time, right? Obviously, there's going to be a bit of a J-curve as we invest this year. But as we were talking about earlier, I think a lot of people asked us a number of questions around how much we were investing in third quarter. We were very transparent around that. But what we didn't get as deep into was, look, we were right in the middle of planning and the teams were thinking about, okay, how do we self-fund as much of this as possible.

And that's the work that really happened over the course of the fourth quarter. And so that's the mindset we have coming into this year is that while we're investing within this wealth management business, we see 20% plus returns out of this. We feel very good about where we're investing both from a technology, very targeted. And then as we're adding advisers, making sure that we do that with an eye towards the productivity gains that we expect to get with every adviser that we bring in or existing -- or have from an existing perspective, we feel good about that.

And we have a lot of flexibility on how fast we hit the gas or if we want to hit the brakes a little bit throughout the year. But it's a tremendous opportunity for us. That's why we're leaning into it. And we see it as one of the key reasons why the retirement business goes from more low single-digit revenue growth type of business to more mid-single digit over time. That's why we're making the investments along with the customer reasons that Heather just called out.

And I feel like one sort of distinction that I think is important as we think about this for Voya, but wealth management is a broad term, right? And UBS is a significant one, right? That caters to a specific set of clients, whereas having that -- the foot in the door on the retirement side, the average sort of 401(k) customer that might literally not know what to do with their retirement savings once they retire, there's real value in just being there, I think, I'm not sort of pitching your product, but having someone on the phone able to say, well, you could consider this or this, right? I think that's sort of -- that is kind of -- that market is underserved. Would you agree?

Absolutely. And Mike, as you think about it, so exactly to your point, we're targeting a different client than many of the other wealth managers that may be focusing in on the ultra high net worth individuals. We're focused on mass affluent, which is your average worker who is sitting inside a 401(k) plan, a 457 plan of various ages. We actually are very excited about the millennial population. This is a population that does not have access to advisers and they're very often going to look to their employer. They're also going to look to different digital tools.

So as we think about what we're building here, it is having, first, field and phone-based advisers that can service those clients either face-to-face or over the phone as they're looking for what should I do with my old 401(k) or I'm approaching retirement or how do I think about planning. We're also -- the digital is so important because, again, you've got a client base that wants to do things in a much more digital savvy way. So that's why investing in the digital self-service is so important. But the third element of this is and something you're going to hear us get a little bit louder about is we also have proprietary products that we sell through third-party distribution. And those are also a significant portion of that $200 million of revenue.

So as I think about where does the revenue go, grow here in terms of how we serve those clients, it comes through rollovers from the DC business. It comes through us being able to do retail planning for those clients. So think about held away assets or it could be rollovers from another retirement plan. But this third-party proprietary where we're able to distribute our own mutual fund IRA products into third-party advisers is -- creates a very compelling opportunity for us to serve in a more broad way.

Yes. I'm going to jump ahead to actually that sort of topic. You touched on the millennials. I think that when we talk about recordkeeping, one of the things that comes up is the large population of baby boomers, the assets they've accumulated and I think 11,000 are retiring each day at this point. But what we rarely talk about is the generations under them. I'm a millennial. I started contributing to a 401(k) early because that's what we were taught, right, whereas boomers earlier in their careers may have had pensions, they actually didn't even contribute as early, even though they do have accumulated wealth at this point.

So I just feel like that part isn't talked about as much. And at the same time, the earlier generations are earning more, right, and saving more. So I was wondering if you could sort of comment on that and that dynamic in terms of the outflows versus the inflows that you're seeing.

Yes. And I think I'm glad you brought that up because there has been such a focus on the baby boomers and the headwinds in retirement. And I think we missed the fact that by the time we get to 2028, the millennials will represent the largest portion of the workforce, which is close to 50 million workers. And then you think about the Gen Z population, 5 years later, the Gen Z population, that's another 50 million. So this is a younger generation that is actually focusing in on active savings. We're seeing a lot of younger investors and younger savers that are actively engaging and being able to first take advantage of the employer doing auto plan enroll, auto escalate.

So they're learning the discipline around saving being part of the retirement plan, but they're also much more open and engaging with IRAs and Roth IRAs and thinking about investing in a broader way at a younger age. Many of these populations have grown up in an era of having higher student debt. So as they are coming into a phase where they're starting to see higher earnings, they're seeing the importance of engaging not only in the retirement plan and the broader benefits, but really in engaging with financial planning earlier. So we're really focusing in on that 100 million population that is fast approaching in the workforce and how do we engage them? And I'd emphasize the fact that this generation does not have access to advisers, right?

I've talked before of -- I have two boys, almost 24 and 26. And who do they call when they've got a question about the retirement plan. Of course, they call mom, right? And really understanding, but they're very active on how much should I save and should I max out and how are they thinking about it? And we want to be able to give them more access to advisers and planning in a more democratized way than exists.

The only other piece I would add, Heather, is that third shot on goal, right? So we're focused on the millennials. We're focused on that mass affluent today. But as the baby boomers age, there's going to be a transfer of wealth as well that's going to happen throughout all of that. And I think it's part of what we think about more in the longer term of the investments on the wealth management side, well positioning us for that transfer of wealth to be able to take advantage of it.

Yes. Totally agree. So defined contribution sort of as a topic. It feels like it's been in the news more frequently last 12 months or so. Department of Labor sort of being more active in defending employers, private credit, of course, inclusion in some of these products, the White House having ideas about helping people access liquidity for home purchases. So my question is, how do you see these different topics? And do you think that this business, I think it is exciting -- more exciting today than in recent history?

Yes. I think the -- one of the things that is central to all of these themes is that retirement is at the crux of financial well-being for the American worker. And what we're seeing is if you think about the changes the administration is doing with the Department of Labor, there has been a lot of pressure on the plan sponsor, the role as a fiduciary. There's been a lot of lawsuits, which have made them a little bit more difficult to engage in certain investment vehicles or thinking about what is the fee structure. And so I think, number one, we see a more favorable environment for the plan sponsor and the fiduciary. Perfect example is the direction of being able to create legislation that is allowing private credit inside these plans.

And we are having more and more clients who are asking around how do they best engage having them part of an adviser-managed account today, but being embedded in a multi-manager target date fund solution is something that they find quite appealing. And so having a regulatory and legislative environment that is shifting, I think, is favorable. The second is a lot of the other focus -- you think about -- I know recently, there's been focus around retirement savings and is that a vehicle for purchasing homes. I think that takes away from all of the legislation that's passed in the recent years of the secure 1.0 and 2.0 plans that have been really promoting increasing ways to drive more savings into retirement plans.

And so we see that the retirement plan, the environment is incredibly favorable. I think what is central and again, hearing the administration now talk about retirement plans are working quite well. You look at the account values have grown tremendously the last couple of years. People are saving more. So I think it goes to your point, Mike, I think this is an incredible industry and an exciting industry for us to be in and being one of the top 5 writers and having this be our largest business really positions us to continue to grow in a space that is so central to financial well-being for the American worker.

Great. Maybe we could pivot to investment management. Definitely exceeded organic growth targets in that segment. That's been certainly a bright spot for you guys. I think you -- we saw you launched active ETFs. Like we said, you're engaging on the private side more. Anything else in the pipeline, we could sort of touch on those, but -- and any other else in the pipeline?

Maybe I'll start, and then I'll pass it over to you, Mike. I think with investment management, so first, two fantastic years, really thrilled with the business that has been outpacing the industry in terms of organic growth. We've had steady margin improvement, really strong earnings, terrific team we have on the field. And as you think about where we've had success and where we expect to continue to have success, first is in the insurance channel. We're serving close to 80 distinct insurance clients today. We see an opportunity to continue to broaden those relationships with those clients. So insurance channel is incredibly important as a first pillar.

Second is the continued growth in privates and alternatives. Much of that is into those insurance clients. But again, we think we're well positioned there. Third focus is around the expansion into the U.S. intermediary market. And so that's why the launch of the active ETFs was so important. But it dovetails really nicely with the focus on the crossover between our retirement and our Wealth Management business because as we continue to expand our wealth management business, that is a great distribution avenue for our investment management arm. And then finally, as we think about the continued growth in the international space with our income and growth franchise, bottom line is we've got a lot of breadth and depth and scale across this business to be able to set us up for continued growth.

Yes. And just a couple of things. I think 2% organic growth, that's our long-term target. Nothing to change there, even though we had a fantastic 2025. I think what gives us a lot of comfort is we're not relying on one particular channel or one particular distribution outlet. It's very broad-based. Like we're doing it internationally. We're doing it domestically. We're doing it across the different investment channels. And so whether it's retail or institutional, I think that gives me a lot of comfort that it's going to continue in '26 and beyond. And to Heather's point, a lot of it is also on the partnership side.

We do leverage the retirement business to help Matt do what he wants to do in the insurance channel because sometimes we don't manufacture every solution. We understand the liability side. And so we understand how to build an asset portfolio around what's needed for other insurance companies. But sometimes we're sourcing those other assets from other manufacturers. And it will be true with the retirement business over time, too, as we talk about alternatives getting an opportunity to be in retirement plans more and more in the future. So that's the playbook we've had for a long period of time. I think it's working. We've had two great years under Matt's leadership, and we expect a third.

So I guess pivoting or continuing on with that, is it safe to say between retail and institutional, sort of equal push? Or is it kind of a pivot towards one or the other?

i mean institutional has been where we've been quite successful, right? I think so when you think about retail, we've really been able to attack that in two ways. One, obviously, with the AGI partnership internationally. And then retail, it's been just a constant steady push. And I feel like that you mentioned active ETFs, that's certainly going to help us on some of the products that we've acquired through the AGI piece, you think about incoming growth and getting more momentum in the U.S. around that particular product. So retail U.S. is one we've been more focused on as that's typically been the laggard in the past, but was not the case in 2025.

Okay. And maybe just because they're here at the conference, but the Blue Owl, curious how that partnership is going so far? Anything new to report there?

Yes. Our teams have been actively working on product launch for the first half of '26. which is the multi-manager target date fund. We already have it embedded into adviser managed accounts. And kind of going back to the thesis of why we selected them as a partner is we have some very, very good capabilities on the private side. We thought that much of what they brought in was complementary to that. And again, when you think about this in a multi-manager vehicle, the fact that we can leverage the best of the organization to kind of build a product together that we can bring to the market in the DC space, we're excited about what lies ahead.

Great. Maybe we'll just do a quick pause. Any questions in the audience before we move on? All right. And just to remind -- we do have some questions. No.

All right. So pivoting to EB stop-loss. I thought maybe we could refresh key messaging from the fourth quarter, what -- and the reserve actions, right, and what drove those?

Yes, happy to, Michael. First, just when we talked about on the call was that if you look at where claims are coming in with the '25 business relative to '24 business, it is modestly better. But what we talked about on the call is like we're in this kind of once-in-a-generation type health care backdrop. And the range of outcomes around stop-loss business today is much different than what we've seen pre-COVID. We typically talk about a 3-point delta on our target range of 77% to 80%. That's what we're trying to price all our new business at. But right now, it's probably something double that, especially coming out of the fourth quarter.

We see a lot of claims experience coming in the first quarter, a lot come in the fourth quarter. Third quarter, typically, we're about 1/3 complete on a paid basis. Fourth quarter, we're about 2/3 complete, and we expect to be about 90% complete in the first quarter. So given the range of outcomes, given the importance of making sure that stop-loss doesn't take us off course in 2026, we want to be on the higher end of that best estimate reserve range. So that's what we did. I think there was some confusion around where does the Jan '25 business finish versus where is it reserved at this point in time. We need to see the first quarter play out. But importantly, we feel like we've taken the right actions to put ourselves in a position again, so it doesn't take us off course.

You look at EB 2024, we had $40 million of pretax adjusted operating earnings. It was over $150 million in 2025, and we expect an improvement in 2026. And so this is just part of that road to recovery within EB, and we continue to take the right actions across the three dimensions of what is going to fix it. One is pricing. One is how we're doing our risk selection. And third is making sure that we're reserving for the products appropriately.

So I spoke with a couple of stop-loss brokers and actuarial consultants. And at least the sense is that it seems pretty clear that the underlying claim volatility, I guess, higher, more expensive claims and the frequency, right, seems like it's probably going to persist. But the beauty is it's a short-tail product. You have been obviously taking rate where necessary, managing the book. And just kind of wondering though, should we expect because the cohort that I was speaking about sort of expect this to persist, makes sense, you can attack that with rate. And your competitors are also seeing it, right? I think that's been pretty clear, right?

100%. And we expect the same -- in the near term, we expect the same thing. We expect enhanced volatility around this product line. It ties to just the comments on reserves I just made. And I do think, particularly at the end of '24, there were a lot of questions, folks thought this was a Voya-only issue. I think in '25, people realize what's happening in the health care backdrop and what's happening around Stop Loss. We actually got a 21% rate increase on the Jan '25 business was more difficult because we were one of the only ones going out with that kind of rate. And we -- the persistency on the block was 2/3. We're typically in the 70% to 80% range.

When you look at what we did in the Jan '26 block, we got 24%. But because you see other companies doing the same thing, we were able to hold premiums relatively stable. We were able to hold premiums stable versus being down in Jan '25. And so I think that speaks to what you're alluding to, Mike. And the other piece I'd say, too, is we're still seeing a ton of RFPs on this product. RFPs are up meaningfully. And when we look at the need in the market for this type of product, it's never been greater because a lot of people are focused on stop-loss. What we're focused on is our customers and trying to help them manage through what's happening from a health care backdrop. And what they want is they want stable benefit spend. And so they're willing to spend 4%, 5% of their benefit spend on health care to get a stop-loss product to lock in what it's going to look like them for the year. And so the value is there, the RFPs are up, and that also lets us get better on the risk selection.

And so we feel like we've made progress in 2025 with the teams on making sure we're even better around risk selection, more thoughtful about things that are happening in the marketplace. We've talked about cell and gene therapy. We've talked about cancer in younger ages. Those themes are elevated. And so we're taking the tack that we want to protect the balance sheet, margin over growth. And so those are the actions we're taking. But just circling back to where we started, Mike, we think it's going to be like this for a little bit for sure.

Over time, I think manufacturers are going to figure out ways to just balance things back to the way they were and make sure profit margins get to where they should. That -- it's not a matter of if, it's just a matter of when, but it will take a little bit of time, and that's why we talked about a 2-year progress.

Yes. And one thing I want to emphasize, I think it's really important is we effectively made progress on Stop Loss, as you said, two year, we made really good progress in '25. We're not declaring victory, but it didn't take us off course for delivering on an exceptional year in '25. And we think that we've got it ring-fenced. We think we're effectively managing it, but it's not going to take us off track with our cash generation in '26. And I do think that's incredibly important. There is more work to be done. We're seeing the market harden. We're seeing a lot of companies that are leaning in doing the same thing. And so most important message is around the fact that we do think we've got this managed, and it's not something that's going to throw us off as we think about what we're aiming to deliver for '26.

and that's sort of a segue into the next part. But I guess I just wanted to reiterate the value proposition for Voya for your customers, the employers. Stop-loss is one of several products that you offer. And at least as I understand it, when you're sitting down and speaking with the employers and working -- obviously, they're under pressure. I would think that the stop-loss product is still advantageous relative to health insurance plans. That's certainly an area of pressure. But you -- I guess it could be an opportunity maybe I'm thinking about it correctly, but let's say, you have maybe a little bit of lower profitability than you'd like with one customer, but they're a record-keeping customer or they participate elsewhere in [ EB. ] But how does that interplay factor in for you guys?

Yes. I think that as you think about Stop Loss, this is a product that most other benefit products, the HR head is the decision maker. This is one where it really comes down to the CFO often making a decision. So it's going to have a different focus. Of course, benefits person is still having a decision in it. But because of that and given the fact that this is the most significant spend, it does go to a few points Mike mentioned. Is that, number one, the demand for self-insured is up because many employers cannot afford the fully insured plan. So we see that continuing to grow.

There's a scarcity issue. There are fewer providers that offer this. So that scarcity gives us the ability to leverage the fact that we are in the market, we can be more, I think, disciplined and selective as we're looking at RFPs. But as we're working with brokers and employers, we are focused in on that broad bundle. So how do we leverage the scarcity fact that brokers have access to our product, employers have access to our product to be able to grow in the other lines of employee benefits or even scale it more broadly across the workplace. What we don't want to do is to sacrifice margin in that focus. So it still continues to be margin improvement over growth, but there is -- we do think there's a broader leverage with brokers.

Yes. We think that's a shift, right? If you go back years ago, probably not the case as much, but we think just given all the points Heather just made heading into '26 and what's happening with the market, we think there's a shift in that regard.

Okay.

Great. Just a reminder, we can take any virtual questions in the last 5 minutes here. We do have a question from the audience here. Just one second.

Just other people are suffering in the stop loss business. I don't know as well, but you don't have the same market share you might have in other businesses, in terms of the industry sorting itself out, would you consolidate in this area to become bigger to own it? Or would you lose that business? Like how much would it hurt you to not have that business and I guess linked to this, this increase in cost of health care, how much do you think is structural versus just the [indiscernible]?

I think the -- I guess the first bit of the question is we -- where we're sitting today about a $1.2 billion, $1.3 billion book. We're a scaled provider in the market. And so from our perspective, we'd frankly rather lose a little bit of that to be able to improve the margins. One of the things that Mike and I have said for years is this is a business where when running at normal loss ratios, we didn't necessarily need to capture market share to continue to grow it because you've got the leverage trend in that. So that continues to be our mindset. But we've been focused on, frankly, reducing the exposure to any bit of volatility that comes from stop loss and growing the revenue and earnings in, frankly, the fee-based businesses, retirement, wealth management, investment management.

And we still think that it is -- to the point we've just been discussing, it's an important product for employers and for our employee benefit business, but really finding that right balance to it. And then to the point about is this -- how do we see this? Is this just kind of a new normal of a trend? I think to Mike's point, and I'll let him add is that the higher claims costs we're seeing, we probably need to expect that this is a newer normal that we're seeing more people with diagnoses. We're seeing increases in costs, I do think that the industry is going to figure it out and that we will get our arms around it from a pricing standpoint, from managing it. But we -- the days of 5% to 6% medical trend are probably in the distant future for a period of time. But I think that we can absolutely get our arms around it and manage that. I think the industry will as well.

Yes. Maybe just two builds. I think first, we have about a 4% market share in stop-loss we have for a long period of time. There's only a handful of companies that have that kind of scale that are offering stop-loss to self-insured employers. That's important because this is a law of large number of gains. Like -- and you'll see it sometimes people try to get in the business. We get a lot of volatility there out, not just now, that's happened over decades. So you need that scale to be able to be competitive in the space.

To Heather's point, this margin over growth concept, we -- there are well-running cases we're happy to have in the book, but there are cases that are poor performing. And if we feel like we don't get the rate or we don't like the risk, we're okay not having that in the book. That's what we should do. Longer term, on the health care side, I don't think stop loss is going to be really the barometer for it per se. But because as I mentioned, the percentage of premium relative to benefit spend is still relatively modest. It's a really good trade for employers. So even though you see these big rate increases, it's something that CFOs are happy to spend. I think it's more a question for health care. Like can they continue to roll out at high single-digit, 10% single dollar inflation? Like over time, I think that gets difficult. That's why that's a big conversation in Washington.

Great. So a minute or so left here, but capital generation, capital return. One of the things that's resonated with me is you're being vocal about consistency in capital return. So I thought we could sort of end it with the outlook there.

You want to start?

Yes, we've been touching on it, and we've talked about it, whether it's the capital return in the first half of the year. We've talked about it from the perspective of being able to do bolt-ons and still be returning capital through share repurchases and dividends. We think we're very well positioned for this. And I think Heather and I talk about it, even though we're looking at bolt-ons, it's like there's no company we know better than Voya. And it's trading at -- we got a return on equity close to 19%. You all know the multiples.

And so it's just hard not to want to do that. And so that's what we're doing, and we'll continue to update you along the way, but that's going to be a big part of the value proposition, along with just growing cash generation. As you talked about, Mike, we feel like we're going to do that in '26, more than we had in '25, and we're going to do that through the commercial momentum, the expense efficiencies across retirement and IM and continuing to get the improvement in margins in EV. So the road map is there. We're just going to go out and execute on it.

Yes. And I would just close with, I think it is such an incredible value proposition. You think about commercial generation that we're committed to and we're delivering on, as Mike mentioned, the cash generation and the higher ROE, it's hard to find a value and an opportunity like that in the marketplace. And we think that it's incredible compelling, and we're going to lean into to purchase our own shares, and we hope you will as well.

Great.

Thank you, everyone.

Thank you, guys.

Good morning. Welcome to Voya Financial's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the call over to Mei Ni Chu, Head of Investor Relations. Please go ahead.

Good morning, and thank you for joining us this morning for Voya Financial's Fourth Quarter 2025 Earnings Conference Call. As a reminder, materials for today's call are available on our website at investors.voya.com. We will begin with prepared remarks by Heather Lavallee, our Chief Executive Officer; and Mike Katz, our Chief Financial Officer. Following their remarks, we will take your questions. I'm also joined on this call by the heads of our businesses, specifically Jay Kaduson, CEO of Workplace Solutions; and Matt Toms, CEO of Investment Management.

Turning to our earnings presentation materials that are available on our website. On Slide 2, some of the comments during today's discussion may contain forward-looking statements and refer to certain non-GAAP financial measures within the meaning of federal securities law. GAAP reconciliations are available in our press release and financial supplement found on our Investor Relations website.

And now I will turn the call over to Heather.

Thank you, Mei Ni. Good morning, and thank you for joining us today. Let's turn to Slide 4. In 2025, Voya delivered strong financial and commercial results that exceeded our targets and accelerated our growth strategy. We delivered over $1 billion of pretax adjusted operating earnings for the full year and significantly grew earnings across all segments. We generated $775 million of excess cash, well above our target.

And in 2025, combined Retirement and Investment Management assets surpassed $1 trillion. This achievement illustrates our scale and reinforces the value of our integrated business model. These financial results reflect our outperformance against the priorities we set at the start of the year, accelerating commercial momentum in Retirement and Investment Management, successfully integrating OneAmerica and improving margins in Employee Benefits. Voya's financial performance and strategic progress show the strength of our franchise and our team's consistent focus on execution.

Before Mike walks through the quarterly and full year numbers, I'd like to touch on a few key highlights from 2025. In Retirement, we delivered exceptional results across our business. Defined contribution net flows surpassed $28 billion, the highest in Voya's history, and our participant base is fast approaching 10 million accounts, demonstrating our expanding reach. The OneAmerica integration significantly exceeded our financial targets while expanding the capabilities we offer clients and broadening our reach with advisers.

We also continued to expand wealth management as a high-margin growth engine. The business generated over $200 million in net revenues in 2025, contributing to our exceptional financial results in Retirement and helping us serve our customers to and through retirement. Across Retirement, our strong margins reflect our scale, our focus on driving profitable growth and our disciplined expense management as we invest in key growth initiatives.

In Investment Management, we delivered strong results, reflecting the scale and breadth of our platform and the momentum we're seeing across the business. We delivered a record $1 billion in annual net revenue and 4.8% organic growth, well above our long-term target. Our platform is well positioned in the areas where the industry is growing, including private assets, insurance asset management and the continued expansion of our intermediary platform with actively managed ETFs.

We're an established leader in the third-party insurance channel built on our expertise in managing Voya's general account. This channel continues to build momentum heading into 2026 and is a clear competitive advantage. Our record net flows in 2025 drove AUM to $360 billion, highlighting both the competitiveness of our offering and the trust our clients place in our investment capabilities.

In Employee Benefits, we made meaningful progress in improving margins and expect further improvement this year. In Stop Loss, we have increased our rates, enhanced risk selection and been disciplined with reserving. Our actions position us well for 2026.

Across the enterprise, our results this year reflect the competitive strength of our franchise and the progress we're making against our strategic priorities. Our strong performance drove significant cash generation and positions us well to further increase excess capital in 2026. Together, our growth in excess capital and strong balance sheet gives us flexibility to deploy capital to the most value-accretive opportunities.

With that, I'll turn it over to Mike to walk through the financials in more detail. Mike?

Thank you, Heather. 2025 marked a strong year of execution. We generated over $1 billion of pretax adjusted operating earnings, $168 million higher than a year ago. And we increased earnings per share 22% to $8.85. This included EPS of $1.94 in the quarter, which was up 39% from last year. These results were driven by management action throughout the year as we delivered above-plan financial results across all our strategic priorities.

We continued our commercial momentum in both Retirement and Investment Management. We significantly exceeded our financial targets integrating OneAmerica, and we achieved substantial margin increases in Employee Benefits. This led to approximately $775 million of excess capital generation in 2025, including approximately $175 million in the fourth quarter. And looking forward, we expect further excess capital improvement in 2026.

Turning to Retirement. 2025 was an exceptional year, marked by record commercial results, robust earnings growth and higher value accretion from OneAmerica. We generated nearly $1 billion of adjusted operating earnings in Retirement stand-alone, 17% higher than 2024. This included $255 million of earnings in the fourth quarter. Earnings growth was primarily driven by higher fee-based revenues, which now exceed $1.4 billion.

Commercial momentum and our integration of OneAmerica are driving a 21% increase in fee-based revenues year-over-year. Importantly, we finished the year with an adjusted operating margin of 40% as we both drove efficiency across the business while investing in key priorities that accelerate our strategy.

We generated a record $28 billion of organic defined contribution net inflows in 2025, and we added $60 billion of assets from OneAmerica. Together, this supported a 30% increase in total defined contribution assets to approximately $730 billion at year-end. We now have a base of approximately 10 million participant accounts for us to serve both to and through retirement.

Looking ahead to '26, we anticipate meaningful defined contribution net inflows underpinned by plans expected to fund in the back half of the year. And our scale and leadership position in Retirement provide a strong foundation for durable fee-based revenue growth, increasing cash generation over the long term.

Turning to Investment Management. 2025 was a year of record commercial results and revenue. Net revenues exceeded $1 billion in 2025. Both institutional and retail revenues grew year-over-year, contributing to overall adjusted operating earnings of $226 million. This included another year of exceptional investment results as we realized $35 million of performance fees in the fourth quarter.

We generated flows of approximately $15 billion, well exceeding our long-term organic growth target of 2%, further scaling our franchise. Flows for the year were broad-based across channels and strategies. In institutional, insurance channel demand for investment-grade credit, commercial mortgage and private credit strategies remain strong.

And in retail, international demand for income and growth remained robust, while fixed income and specialty equity strategies drove positive flows in the U.S. intermediary channel. We enter 2026 with significant momentum and are on track to deliver another year of organic growth.

Turning to Employee Benefits. Adjusted operating earnings were $152 million in the full year, significantly improved from $40 million in the prior year. A key driver of this improvement included Stop Loss, which I will discuss in a moment. In Group Life, full year loss ratios were at the low end of our target range of 77% to 80%. This included favorable loss ratios in the fourth quarter, driven by better-than-expected frequency and severity of claims. In Voluntary, our full year loss ratios were approximately 50%, consistent with our plan to drive enhanced value for our customers.

Turning to Stop Loss. In 2025, we delivered meaningful improvement supported by higher rates, tighter risk selection and disciplined reserving. Full year reported loss ratios improved by 10 percentage points from 94% to 84%. This reflects in part a reserve increase of $37 million in the fourth quarter.

Claims experience on the '25 book is developing modestly better than the prior year. However, ensuring we have a well-supported reserve level heading into first quarter is essential. And as a reminder, claims experience for January cohorts will move from approximately 65% to 90% credible on a paid basis through the first quarter.

Looking forward, we continue to embed recent experience into our pricing and risk selection. For the January 2026 business, we achieved an average net effective rate increase of 24%, above the 21% increase secured last year. Different than a year ago, we were able to maintain in-force premiums. And we have more opportunities to select our risks with RFP volumes rising, driven by employers seeking greater certainty in their medical spend. Collectively, these actions, reserving, pricing and risk selection have materially strengthened our positioning and support further margin expansion in 2026.

Turning to Slide 11. We generated approximately $775 million of excess capital in the full year, including approximately $175 million in the fourth quarter. This meaningfully exceeded our $700 million target in 2025. Exceptional earnings drove a more than 200 basis point expansion in our adjusted return on equity, which now stands at 18.6%.

We have been disciplined with our capital in 2025, including our acquisition of OneAmerica, which is generating earnings and returns well above our original targets. More broadly, our strong balance sheet, healthy excess capital and highly cash-generative businesses provide us significant flexibility to deploy capital in the most value-accretive way.

In the near term, the best use of that capital is for share repurchases. We will repurchase $150 million of shares in the first quarter and expect to do the same in the second quarter, subject to macro conditions. Longer term, we will continue to be strategic, opportunistic and disciplined with our deployment of capital as we accelerate our strategy. We head into 2026 with clarity on our priorities and great momentum. We exceeded our financial targets in 2025 and expect to do the same in 2026.

I'll now turn it back to Heather to share those priorities.

Thanks, Mike. Turning to Slide 12. I want to thank the entire team here at Voya. Collectively, we delivered for our customers and positioned Voya for another strong year in 2026. Our priorities for 2026 are clear and compelling: growing excess cash generation, maintaining balance sheet strength and capital flexibility, driving continued commercial momentum in Retirement and Investment Management, and further improving margins in Employee Benefits. These priorities and our continued focus on execution, accelerate our growth strategy and create meaningful value for our customers and shareholders. We are helping our customers build financial confidence and clearing a path for better outcomes today and in the years ahead.

With that, I'll turn it over to the operator so we can take your questions.

[Operator Instructions] Our first question is from Bob Huang with Morgan Stanley.

My first question is on Stop Loss, especially regarding the reserve that you've added. Can you maybe give a little bit more details behind the reserve actions? Is it more of a -- you have the reserves mainly just to pad the reserves to be conservative? Or is it more you're actually seeing some losses developing that would cause you to take the actions you've taken?

Bob, yes, first, just let me start by saying and reiterating what I shared in the prepared remarks. When we talk about the January '25 business relative to the January '24 business, it's running modestly better than where we were at this point last year. That includes when we set the reserves coming out of December and frankly, where we stand right now.

And then to your question, second, we did increase reserves in the quarter. The importance of the claims experience in the first quarter can't be understated. As I mentioned, we moved from 2/3 complete to 90% complete in the first quarter. And the range of outcomes today is different than what I would say historically for Stop Loss. You hear us talk about 77% to 80%, a 3-point range. But with this health care backdrop, that range is wider, probably double the normal range. And so when we look at the reserving, we think about being on the higher end of that best estimate range.

Now when we look forward and we think about the margin expansion that we expect in 2026, we certainly see that coming from not only the perspective of where we price the Jan '26 business, 24% increase we got on that business. And frankly, from a risk selection perspective, we've gotten more opportunities. RFPs are up. And as I just mentioned, we are seeing employers look for this type of coverage as they're really trying to get certainty with their medical spend.

I think the big step back here right now is that when we look at Stop Loss, it did not take us off course for an incredible year in 2025. And the actions we've taken across pricing, risk selection and how we reserve for this heading into 2026 positions us to say the same.

Got it. Really appreciate that. So it sounds like your path hasn't changed. So maybe a follow-up on that specifically is the 24% rate increase for the January 2026 cohort. As we go forward, obviously, that's a big rate increase. Do you feel that rate increase is enough or sufficient going forward as we think about just the broader Stop Loss environment where you feel like maybe going into the next few years, there should be more pricing. Just curious, any comments or dynamics on pricing.

Yes, we do. We do, Bob. We feel -- when we think about where trend is, we talked a lot about the fact that we expected higher trend in '25 and '26, and so we went out to get that rate. Certainly, it was easier for Jan '26 than it was for Jan '25 as we were ahead of many in going after that rate. But when we look at this relative to that kind of high single-digit, maybe 10% first dollar trend, you lever that up around, we think, in that 20% range.

And so the other piece I'd mention, too, is that demand we're seeing from employers that are looking for certainty of spend. We feel like as we move forward on the progress of margin improvement at the cohort level that we're going to have even more opportunity in 2026, because when you look at the demand, it's up, supply is at best, limited to down.

Yes. And Bob, it's Heather. Maybe one thing I would add, just to kind of do the broader step back on stop losses. We've always talked about this being a 2-year journey. And as Mike talked about the $100 million improvement in earnings in '25 is a significant step in the right direction. We aren't declaring victory. As Mike talked about, we're reserving for a wide range of outcomes, but we believe we only have upside from here, which is why we have reiterated our capital deployment plans for the first half of '26.

Our next question is from Tom Gallagher with Evercore ISI.

A couple of Stop Loss follow-ups. Mike, when you said your actions support further margin expansion in '26, are you -- is your baseline the 84% that you did for the full year? Or is it the 91% accident year loss ratio for the Jan '25 cohort like what should we -- when you say improvement from which number, the 84% or the 91%?

I think it's both, Tom. Like when you think about the 84%, I mean, certainly, that's the reported levels of loss ratios for the full year. And as Heather just mentioned, we took the EB business from $40 million to $152 million. That included progress with Stop Loss, but also from the 91% perspective. And I think Bob was getting at this just a moment ago, when you think about reserve levels, and frankly, we -- fourth quarter is super critical when we make that assessment of where do we think the range of outcomes are.

As I just mentioned, it's not a 3-point type of wideness in the range. We think it's frankly closer to double that. And we want to be in a position here where we're at the higher end of that best estimate range. Now we certainly need to see where things play out in the first quarter, and frankly, some of the second quarter before we decide where this is ultimately going to land or where we see where this ultimately is going to land. But the one thing I would just kind of encourage folks to think about here is don't conflate where we're reserved at with where this ultimately lands.

And Tom, I would just add to it, if you really compare where we were a year ago with our reserve levels, about this time last year, we were close to 95%. And while we're not fully complete, on the '25 book of business, you see it coming in closer to that 90%, 91% range, which is quite an improvement. And so we do think it's prudent given the backdrop to do the reserve adjustments that Mike mentioned. But as you saw last year, things only went in a one-way direction which was a positive direction. And so we see -- we like the progress we made, and we see further upside from here an improvement to build on what we delivered.

I appreciate that color from both of you. My follow-up is just if you look at the, I guess, the loss pick of 91%, it implies loss cost trend was up 20%-ish. Is that the right level that you think is happening across the board for Stop Loss? on a trend basis? Or was there something about your risk selection? Did you get selected against? Do you think your loss experience was worse. I just want to get a sense for like what did you see in the quarter? Was it material worsening? Or is this more conservatism?

I just want to get a sense for what do you think actually happened in maybe why -- I think people look at the 91% and they get scared because you went from 87% and 91% and think you don't have your arms around the situation. So maybe just to the extent that you can tell us how confident you are that you have your arms around the situation and you're not seeing adverse selection.

So from a risk selection perspective, it's about a well thought never one. I think when we talked about the Jan '24 business that was risk selection, not where we wanted to be, in any way, shape or form. We made improvements when we think about where we were at Jan '25, and we expect to make even further improvements on risk selection. So it's never perfect.

Tom, I think to your question around the trend, as I mentioned earlier, like we think it's in that, call it, 20% high teens level. And so it was more difficult to get rate in the Jan 2025 than it was for the Jan 2026 for the reasons that we were talking about around demand. So when we -- when you just kind of roll that all together, your -- the heart of your question, like do we feel like we have our arms around this? Absolutely, we do.

Our next question is from Mike Ward with UBS.

I was curious about maybe just utilizing the Stop Loss experience. And in terms of leverage in order to sort of cross-sell other products with specific employers, you know what I mean? Like how is that going? Is that becoming material? Is that contributing to your confidence in '26 for the Retirement side?

Yes. Mike, it's Heather. I'll let Jay add. But I think what's important to think about is that we're often selling Employee Benefit products to the same brokers and consultants, both the Stop Loss and the Voluntary. And it goes to the point of we see high demand for the products that we're offering. But maybe the last bit I mentioned before I toss it over to Jay is our teams have continued to be highly disciplined on margin over growth. So we're not leading into anything to drive unnecessary growth just given the backdrop. But Jay?

Yes. As we think through this heading into '26, as Mike referenced, the supply at best level, we think is actually down, but the demand is significantly up, and we're hearing that from our brokers and intermediaries. And so what it does is it does cause this kind of capacity conversation of there is only so much capacity in the marketplace for coverage. And getting a more fulsome book as we think through the areas of Employee Benefits and where we have and are in similar segments in Retirement, we definitely are changing that conversation. It's happening in front of us. We're engaged in those conversations now. We expect those conversations to continue.

We are also seeing more and more from a bundling perspective. So as we get into different questions on different parts of the book, we're seeing a greater opportunity to bundle given what we've done in some of the product lines. And so I think we'll come back to you as this conversation progresses, but it's definitely a leverage point and a conversation point we're having actively with our partners.

And then just for Heather and Mike, you both sounded confident on the idea of expanding your excess cash flow generation in '26. Wondering if you could unpack that a little bit more.

Yes. Look, it really boils down to what we've been talking about in 2025 and what we're signaling around 2026 from a priority perspective, Heather finished with this, really, there's really three elements. I think the first element is the commercial momentum that we've had in both Retirement and Investment Management, record years. Earnings have been fantastic. And then what we just talked about from an Employee Benefit perspective, we made good progress in 2025, but we're not satisfied, and we see even more margin expansion in 2026. That's going to be a contributor as well.

And then if you're looking at it from a per share perspective to Heather's point, just a moment ago, we see share repurchases as a key element of the value proposition. And frankly, when you look at our return on equity at close to 19%, we're more than happy to buy shares at these valuations.

Yes. And Mike, maybe to build and certainly makes sense while there's a lot of questions on Stop Loss. But if you think about the broader and, frankly, larger portion of our business, we've had an absolutely amazing year in '25. If I think about record revenue and Investment Management, record flows driven by a diversified breadth of solutions with strong investment performance. We've talked about and you heard Mike mention on the call, an absolute record year in Retirement that is setting us up well for continued growth at margins that frankly have been above our long-term target. We're making progress on the build-out of wealth management, which further diversifies that business.

And then the OneAmerica, where we've added additional capabilities for our clients. We brought in additional distribution partners but we've also demonstrated really good deployment of capital into an acquisition that generated over 30% unlevered return. So to your question, Mike, yes, we feel confident in our ability to continue to grow cash generation in '26 and are committed to returning that back to shareholders.

Our next question is from Suneet Kamath with Jefferies.

I wanted to go back to Stop Loss. Mike, as you were talking about the '25 block, I think you said it was modestly better than '24. And I had sort of expected it to be significantly better just given the pricing actions that you took. So I guess the question is, is this 2-step process that you talked about sort of extending to maybe it's going to take you another year to kind of get there in terms of the loss ratio?

Yes. Look, I think it's a stay tuned, Suneet. We're pricing this business, and we did it in the fall. We'll do it in 2026 to get our target margins. And as we've been talking about, we made a lot of progress in 2025. We're not all the way there. Our expectation is to continue to make progress in 2026, the exact amount of that, I think we'll have a better sense as we get to more in the middle, late part of 2026. But we'll update you along the way.

Like Tom was asking earlier, do we have our arms around this, we do, and we're taking action across the three dimensions. And those three dimensions are the pricing, the risk selection and the reserving. And so we think we've taken the appropriate steps in the fourth quarter to make sure that we're in a good position in 2026 to continue that excess capital generation growth that Heather just talked about a moment ago.

Okay. And then I guess when you go from 1/3 to 2/3 then to 90% of the experience, is there something in the latter part of how that experience earns in that gives you more information? Or is this just as you saw what happened in the fourth quarter, that's what caused you to take the reserve build?

Yes. It's just timing, Suneet, right? Like fourth quarter is really critical. First quarter is really critical. That's not new news. We've been trying to get that across for the reasons you just called out. And so even though the claims are happening in 2025, we may not be aware of them until 2026. There's just a lag between event and when it's reported. And so with that health care backdrop, I think it's just super prudent to be on the higher end of best estimate ranges for reserves. So that's what we did.

Our next question is from John Barnidge with Piper Sandler.

My first question is on Stop Loss. And Mike, you had some comments about range of outcomes is different today than historically and a lot wider. Is it one of these things with the Stop Loss business with the fourth quarter there just probably is going to be more seasonality going forward in this business, in this backdrop, setting aside the rate need?

Look, I think -- when we look at '24, we look at '25, we're in kind of a once-in-a-generation type of situation as it relates to the health care backdrop. Where this lands as we get deeper into 2026. And is this going to be something that's happening every fourth quarter? Yes, I wouldn't want to signal that. What I would want to signal is that the analysis, the work that we do and what we're putting on our book and the analysis and the work that we're doing in assessing what the right amount of reserves are, that's going to continue.

Does the range stay at a similar level in December of 2026 that it is December 2025. We would hope not, but if it is, that's the way we're going to assess it. And all the actions we've taken heading into this year, again, gives us a confidence level that we're going to continue to expand margins in EB, and it's not just a Stop Loss story. It's frankly across the board in that particular business line.

And my follow-up question, can you talk about the strategic rationale of Stop Loss in the context of what it brings in synergies to the growth opportunity in Investment Management and Retirement?

Yes, John, it's Heather. Happy to do that. And I think if you look broadly at Employee Benefits and Stop Loss, this isn't a very important product in our overall portfolio. If you think about within the workplace business, stop losses in incredibly high demand for employer clients to help them control really more volatile medical expenses when they choose to self-insure.

As you heard Jay mention, there is much greater demand and lower supply. And so we think we're in well positioned, specifically demonstrated by the 24% rate increase we achieved on the book, while maintaining the block size. But it also goes broadly. You think about the supplemental benefits we have is those are really critical for families and employees to cover out-of-pocket expenses when they're in a high deductible plan. It goes to the capabilities Jay talked about in terms of the lead management build-out is that our workplace benefits are designed to help people protect against unforeseen events.

And then you think about the complementary nature across Retirement, wealth management and asset management, those are all really around accumulation returns and planning. And so I see them as the opposite side of the same coin is that we've got the right capabilities to serve clients at the workplace. We've got the right capabilities to bring to institutional clients. And it goes back to our vision really helping clients to achieve and secure financial future. So it really is a great strategic asset for us.

Our next question is from Jimmy Bhullar with JPMorgan.

So I just had a question on the Stop Loss as well. And clearly, the results have improved over the past year as you've implemented price hikes. But it's hard to imagine that you're not seeing something that would have warranted you increasing the pace at which you're building reserves versus 3 to 6 months ago. Like I just don't think you would just willingly raise the reserves just for the hell of it to be conservative. So -- and you haven't answered anything on any of the questions on what it is that you've seen now versus maybe 3 months ago, 6 months ago that have caused you to raise reserves as much as you have. Like I realize you will eventually fix this, but you're just not answering the question on what's happened in the business in the last few months.

Yes. Jimmy, I think again -- and maybe just to give you a little bit of color on the types of that we're seeing, if that's what you're looking for. And it's not a different theme. Like we're seeing the same themes with respect to higher frequency related to cancer, particularly at younger ages. We're seeing the higher severity from a cell and gene therapy perspective. And again, like think about where we are in the development. I think that's the key here, right? We moved from really not developed until we get to the third quarter. But even in the third quarter, we're only about 1/3 developed. And we moved to 2/3 developed in the fourth quarter. That's when we're making the real assessment on the range of outcomes.

And then in the first quarter, we're getting a sense of where this lands. And so as I mentioned earlier, when Tom was asking, like, don't conflate where this is landing from where we're reserving at right now. The range of outcomes are wider, and so the prudent thing to do is to be on the higher end of that best estimate range. So the ultimate improvements are going to play out as we move through the course of 2026, but we feel good about where we are, and we feel good about the progress we're making.

But the range of outcomes, okay, that is wider, but you're choosing to be conservative based on something you're seeing in the market, right, or in the loss environment. Because you could have chosen to be conservative throughout the last several quarters as well. Like I heard all the other questions. That's the reason I asked or I heard all the other answers that you provided.

Jimmy, let me add on. I think Mike's been really clear in why we did what we did. But if you take a bigger step back and you think about what's going on in the U.S. health care market, right? We are seeing more cancer claims. We are seeing higher cost of pharmaceutical drugs. That gives a wider range of outcomes. So if we have historically given you a target range of 77% to 80% of a loss ratio, when you think about it, that's a really narrow margin, right? Think about -- if you think about a hurricane trajectory, several days out, you've got a much wider cone. And as you get closer you see a lot -- you have a lot more certainty. And that's really how Stop Loss develops. It is 1/3 complete through the first 9 months of the year. The completion doubles in the next quarter.

And so for where we are and given the claims that we see coming in, as Mike hit on that we see '25 coming in favorable to the '24 book. But it really is that range of uncertain outcomes given the broader healthcare backdrop that we just think it is prudent to take the reserves up, and we see opportunities to more surprise to the good versus surprise to the bad.

Our next question is from Wes Carmichael with Wells Fargo.

Maybe first question off a Stop Loss. But in the Retirement business, could you maybe talk about the outlook for full service in 2026 in terms of organic growth? And also, are there any shock lapses that you expect to still come from OneAmerica? Or are we largely through that?

Sure. If you think a little bit about where we are heading into '26, we are building off of '25 strong organic DC net flows. If you think about the $28 billion we generated. We also had $60 billion in assets from OneAmerica. Our growing participant base is approximately $10 million, and we've done that in high 90s retention rates. So we do expect that the flows in to continue to be strong. And much of this, we expect to be back half weighted. We do have visibility into some of the plans that are funding in '26.

An important data point that we use is around planned RFP activity. And we saw that activity continuing to grow at a healthy and consistent pace heading into '26. We're really pleased with the strong commercial momentum in Retirement, and we'll continue to come back. Again, that's on the heels, if you think about where we finished in '25, Heather referenced this, earnings growth of 17% and above target margins of approximately 40%. So really heading into the year with a lot of strength.

Got it. That's helpful. And maybe just a follow-up on capital deployment. Mike, I hear you loud and clear on buybacks being a near-term use of capital. But could you maybe talk about a little bit further out? Are there more potential roll-up opportunities in the Retirement space? And maybe how many opportunities are out there that are similar to OneAmerica that you might be thinking of?

Yes, Wes, it's Heather. I'll take your question. So if you think about it, the industry -- retirement industry continues to be in secular consolidation. And we're viewed as a natural buyer. I think we demonstrated that very clearly with OneAmerica that we can do this quite successfully and deliver for our clients. So we're actively assessing opportunities. We think that the -- there is a number of opportunities that we can pursue. But having said that, we do have a high bar for M&A right now, given what Mike talked about as we see the most value accretion deployment of excess capital is into share buybacks.

Maybe the final comment I'd make Wes is, to go back to something Mike mentioned on the third quarter call, is that if we were to pursue a retirement roll-up, it does not take us off track to be able to return capital to shareholders. We understand that, that delivering and returning capital on a consistent basis is important to our shareholders. So if you think about the cash payment of OneAmerica, not a large size. So we think there's something that we can do both.

Our next question is from Alex Scott with Barclays.

I do have one Stop Loss question, and I promise I'll ask about something different. So when I think about the 91% policy year and I think about the 24% and the fact you took 21% and it didn't get better last year, it does feel like to believe that you can get better off the 84% calendar year, I need to be able to believe that what you're saying on the conservatism and reserves is real. And it's obviously a tough thing to believe just because like we've had this negative momentum broadly in the albeit you did have favorable development of last year, so I get it.

But I wanted to see if you could give us some metrics, right? Like usually, we could assess this using -- in property and casualty, something like a paid [ out ] ultimate. So if you could tell us how much in actual cash claims you've paid out so far this year on the '25 policy year versus last year versus maybe the historical average or IBNR as a percentage of reserves, something to help us like have some kind of quantitative evidence that what you're saying is real around this conservatism?

Yes. Again, Alex, I mean that's something we can think about for future calls to put out there. I think, again, as we've been talking about the first quarter is going to be able to put that in a more clear light because I think folks will take information on paid claims and try to compare that to 2024. And it's hard to do that. And why it's hard to do that is, number one, it's a smaller block. Second, we've improved the loss ratio experience and then even claim settlements, which we're doing faster today than we did a year ago can conflate how to think about those things. So we don't want to confuse the matter from that perspective.

But again, like we -- when we've been talking about this, we -- the uncertainty around claims in the fourth quarter was high and coming into 2025. It's high coming into 2026. We're happy with how the '24 block is developing, that's developed favorable relative to where things were reserved for coming into 2025. we cannot guarantee that's going to happen in 2026, but that's exactly how we're positioning ourselves.

Okay. All right. Understood. And then second question I wanted to ask about artificial intelligence. And maybe both the good and the bad, right? Like what are the opportunities you see broadly? But then also from a risk standpoint, are there any parts of your business that could get disintermediated. And I think the stocks kind of moved yesterday on the idea that maybe there's software concerns and investment portfolios broadly. So I'd be open to any kind of color you could provide on that as well.

Thanks, Alex, for the question. It's Heather. I'll start, and then I'll ask Matt to add some comments on just how do we see it in the broader investment arena. So first, as you think about AI, the opportunities, as you'd imagine, it's something we're leaning into. Our focus is on leveraging AI to be able to improve client experience to help us to drive efficiencies and to support scale and growth.

We are deploying it right now across a number of areas within our claims organization, within our contact center, certainly within technology as we think about how it allows us to speed up some of the software, the programming that we're doing. So it's something that we are leaning into. It's not new. We've been leveraging some bit of AI for a number of years. We're also paying attention to how it could disintermediate us.

I do think that given the businesses that we are in, we -- people need insurance, they need retirement planning. We see it as something that is a little bit less of a disintermediator, but we're paying attention to ways that it could disrupt us. But right now, we see a lot more opportunities than headwinds on AI. And a critical one goes back to something we've done for years, which is expense efficiency, being able to maintain and grow our margins, and we see AI as an important lever. But Matt?

Yes, Alex, an important question for the broader investor universe here. You're 100% right. I think it's important to think about where there's risk and where there's volatility. And I'll start with an insurance sense about our general account and how we view this really not an issue within the core GA bond portfolio. A broad technology makes up for us a little over 1%. I think you'll see some stats a bit higher across our peers. But again, I think you're going to be generally in the single digits there. We're a little over 1%. And software is about 0.5% if you look at that directly.

And in the investment-grade space, you're going to run in names like Alphabet, Microsoft, Salesforce and beyond. So you've got diversified business models that can actually do quite well with AI, if done correctly. So within a core GA sense, I don't view it as an issue within the private portfolio, less than 1% of our portfolio is in tech. And within high yield, we're not really exposed to below investment grade in a meaningful way as a balance sheet, and that's where you see more industry risk. We don't have anything notable there, nearly 0 in high-yield tech.

Over time, we view technology to be a much better investment from an equity standpoint than a debt standpoint. You can have very disparate outcomes. That plays itself better in an equity sense. Across the equity portfolio, you really have to get into our alternative portfolio for Voya. That's about 3% of our balance sheet within PE, you'll tend to see 25%-ish, 20%, 25%, we're lower than the 25% number in software related. So it's still meaningful. But you get, again, down to a number that's less than 1% of the GA. And I think that's where you have both upside and downside. But in the debt markets, we prefer to lean away from tech and feel very well supported.

But if you're going to look for volatility, look for those more the venture more the recent vintage PE, we don't feel meaningfully exposed there as far as even that alternative portion of our portfolio.

Our next question is from Joel Hurwitz with Dowling & Partners.

So just one on Stop Loss, Mike. I guess I'm just still trying to understand why you can't provide us with the paid claims experience, right? That's something that you guys provided as last year in the fourth quarter in your slide deck. And at the end of the day, I think we're all just trying to understand what does it actually mean that the book is performing modestly better year-over-year.

Yes. Look, I think that's again something we can think about taking forward, Joel. Like when I -- and I mentioned this just a moment ago from a reserving perspective and why we need to be cautious with this. The amount of reserves that we have up this year versus last year is meaningfully less. And part of that is because we've got a smaller block. A part of that's because of just timing of when reserves released versus incurred from the '24 to '25 block and then just the settlement part of it on paid claims. And so when we do the assessment of what we think the appropriate reserve level is, yes, we look at paid claims. We're looking at reported claims. There's more dimension to that than just, hey, how are paid claims developing.

But we certainly can provide more color as we move down the road and particularly in the first quarter, I think would be an appropriate time to do that because you're going to have the right comparison year-over-year. But we'd just be reiterating the same messages that we shared earlier with respect to how we think about reserve levels.

Okay. And then shifting, can you just provide some outlook on how the take-up of your new leave offering and short-term disability has gone, and how we should think about that from a revenue and earnings standpoint in '26?

Sure, Jay will start and Mike can address the revenue question.

Great. If you think about the leave investment, we did successfully launch the integrated leave and disability claims solution in January. We do expect that the offering is going to continue to contribute revenue throughout '26. While it's early, we are encouraged by the initial feedback from our clients and our intermediaries, and they are providing that feedback real time. The market demand for this is really strong. We did see that over 50% of the Group Life, disability and sub health RFPs for 1/1/26 were bundled with leave. It's a really positive sign given the in-source and the commitment we've made to the space.

But we are consistently hearing right now from our clients and brokers that leave administration is the most important capability they're looking for from carriers today. So specifically, they focus on the claims experience for their employees. We'll report back progress throughout the year, but we're really happy with the 1/1 launch.

Yes. The only thing I would add, and I want to come back to the question from Joel just for a moment. But when we look at -- just as you're looking at in-force premium growth, I think we just would encourage you to look at the growth from '23 to' 24 to '25. So growth has been more modest year-over-year. But when you look at 2-year growth across Voluntary, Group Life, very, very good. We had a fantastic year in 2024.

And just on paid claims too, I know that's come up a couple of times here at the end. Like we're not sharing a number. We're saying it's modestly better when you look at Jan '25 or Jan '24, you should be thinking low single digits better on a paid claim basis from where we were a year ago to today. More to come. We don't want people running with that number yet because we need to see how things play out for the balance of the year. But that -- just to size it a bit, that's kind of what I would have in your mind.

Our next question comes from Kenneth Lee with RBC Capital Markets.

One on Investment Management. You saw nearly 5% organic growth in 2025. What were your expectations are for organic growth this year? And in particular, any specific products or offerings you see as driving most of that growth.

Ken, yes. So as you referenced, very pleased with the overall momentum in 2025, the $14.6 billion net growth, really best in a market that still has headwinds. So very happy with that. The theme going into 2026 is, say, twofold. A, longer term, we continue to think about that 2-plus percent organic growth rate assumption. We entered '26 with momentum that has allowed us to grow above that. And we do expect the first quarter to be positive with good breadth across the domestic market. So that's good as we really come into the year on our front foot. That's driven by strong investment outcomes.

If you think about the 1, 3, 5, 7, 10 years, we deliver for our clients, and we get rewarded by our clients with net cash flows. And that's still the basis. And I think the performance fees at the end of the year were a testament to that as well. As far as where we're seeing products and channels, not a big change, insurance with fixed income, public and private still a stall work for us, very strong competitive position. We think more broadly in the U.S. institutional space.

In DC, our target date offerings and partnership and coordination with our Retirement business is a good forward look, new products coming there. and fixed income continues to resonate there. And then internationally, income and growth in thematic equities, again, driving that. So really, it's a continuation of a story of breadth while we're looking to continue to grow upon our strength. So we enter first quarter feeling quite good.

Great. Very helpful there. And just one quick follow-up, if I may. Just on the Voluntary benefits side, what's the outlook here for this year? Is still around 50% benefit ratios there?

Yes. Maybe I'll hit it from a loss ratio perspective margin. And then maybe, Jay, if you want to hit it from just a premium perspective. So we've talked about 50% throughout the course of 2025. We have been building up reserves to get in front of the fourth quarter when we see a lot of seasonality for that product line that worked exactly according to plan. So we saw the 50% come through.

The outlook, we say modest increase with respect to loss ratios. That's totally part of the plan of us providing more customer value with these products. These are important complements to high deductible health care plans. But from a net margin perspective and Heather was alluding to this before, I think it's true not just within EB, but across the board. I mean we are constantly finding areas where we're looking for efficiencies to offset either investments for growth or protect margins where we want to deliver more customer value. And so I think when you look at the Voluntary line, I would think of slightly higher loss ratios, but net margins intact.

Ken, I'll address a little bit how we see the voluntary market heading into '26 and maybe a quick step back on EB. We do expect growth in '26. 1/1/26 sales showed that commercial momentum. Just as a reminder, we are a top 3 provider of Voluntary. We've got about 10% market share. I did reference the newly in-sourced integrated leave and disability claims solution that is going to be kind of contributing to some of the growth and retention of our Voluntary products. That did show itself in 1/1/26, as I referenced, that 50% RFP with bundle.

With that said, our top priorities right now across all of EB really does remain focused on this margin expansion. We're doing it through pricing execution where it is driving stronger persistency in our customer base. That's important. And as Mike referenced, we're creating more efficiencies in the business through investments in claims automation and AI, which is starting to show itself into the efficiency line. And so really happy with where we are in the EB business. As it relates to Voluntary, 1/1/26 was a positive step.

Our next question is from Wilma Burdis with Raymond James.

What's the best way for us to -- or could you give us some insight into how you're thinking about the loss pick for the January 2026 Stop Loss business? Maybe if you could just pull together the pieces on the 24% rate increases, 20% medical trend and any benefits from risk selection.

Yes. Not a ton to add here, Wilma, on just how to think about trend that part of it. We've talked about that being an approximately 20% high teens is where we see trend. And so the other part of it is risk selection where we continue to make improvements, particularly versus where we were with the Jan '24 block. Jan '26 will come back to that in the first quarter. I think it's the same story here where we're going to look at the experience that comes in Q1. We talked about getting improvements. So we'll be in a better place than we were for Jan '25, but where we ultimately set that, we'll make that judgment in April.

Yes. And Wilma, the only thing I'd add to Mike's point is just something he said earlier is, as we're pricing this business, we are pricing it to be back within our target loss ratio range. So I just think that's an important element. And as Mike mentioned, we'll give you more details on the first quarter call.

Okay. And cash generation exceeded Voya's target for '25, could you drill a little bit more into the factors were reserve releases on '24 Stop Loss business. Is that something that would have supported the figure? Or how should we think about that?

Yes. I mean certainly had an effect on the cash generation in 2025. I think net, if you think about what we did in the fourth quarter with the prior period reserve releases in Q1, Q2 were net favorable with respect to just Stop Loss, EB in totality was better. I talked about expenses. So it certainly played a role. And we -- the base case is that it plays a role in 2026 as well.

Yes. And I would add, Wilma, is, again, you think about the cash generation of our Retirement business, the largest business is successful integration of OneAmerica above our targets. That was also a significant contributor to cash generation in addition to what we delivered for in Investment Management. So really, it is a portfolio story and something that we are confident we're carrying into '26.

Thank you. We have reached the end of our question-and-answer session. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Good morning. Welcome to Voya Financial's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the call over to Mei Ni Chu, Head of Investor Relations. Please go ahead.

Good morning, and thank you for joining us this morning for Voya Financial's Third Quarter 2025 Earnings Conference Call. As a reminder, materials for today's call are available on our website at investors.voya.com. We will begin with prepared remarks by Heather Lavallee, our Chief Executive Officer; and Mike Katz, our Chief Financial Officer. Following their remarks, we will take your questions. I am also joined on this call by the heads of our businesses, specifically Jay Kaduson, CEO of Workplace Solutions; and Matt Toms, CEO of Investment Management.

Turning to our earnings presentation materials that are available on our website. On Slide 2, some of the comments during today's discussion may contain forward-looking statements and refer to certain non-GAAP financial measures within the meaning of federal securities law. GAAP reconciliations are available in our press release and financial supplement found on our Investor Relations website.

And now I will turn the call over to Heather.

Thank you, Mei Ni. Good morning, and thank you for joining us today. Let's turn to Slide 4. We're pleased to report strong third quarter results that reflect meaningful progress in delivering on our investor value proposition. Our results build on the success we've seen year-to-date, with adjusted operating EPS in the quarter, up nearly 30%. This performance is a clear reflection of our focus on profitable growth across our diverse and complementary businesses.

Equally important, we generated robust free cash flow in the quarter and remain on track to exceed our $700 million full year target. We've continued to take a balanced approach to capital deployment across the enterprise, and Mike will share more on that in a few moments. I'll also talk about how we're deploying capital in support of our enterprise strategy -- our core markets, expanding into adjacencies such as wealth management and strengthening the connections across our businesses. While we continue to invest in our businesses, we remain committed to returning excess capital to shareholders. As planned, we resumed our share repurchases during the quarter.

Turning to Page 5. Let's look at how we executed on our near-term priorities this quarter. In Retirement, we delivered strong earnings and revenue growth with full year results trending above expectations. This performance was driven by $30 billion in year-to-date organic defined contribution net flows, putting us on track for our strongest DC net flow year since 2020 and further strengthening our market-leading retirement franchise.

Investment Management continues to show strong commercial momentum. The business delivered strong earnings in the third quarter with positive net flows and continued organic growth, putting us on track to exceed our organic long-term growth target of 2%. Voya's performance remains a key differentiator with 74% of our public assets outperforming peers and benchmarks over 5 years and 84% over 10 years. Later this year, we'll launch our first actively managed ETFs further expanding our product lineup and building on our multi-sector fixed income expertise. This launch supports modernizing our intermediary platform with high-growth vehicles, and expanding distribution, creating new opportunities that connect Wealth Management and Investment Management.

Within employee benefits, we continue to execute our disciplined pricing strategy in Stop Loss with a focus on margin over growth as we head into 2026. In October, we launched our integrated claims system to support lead management, a key milestone as we prepare for a full rollout of our end-to-end solution on January 1. This will strengthen our bundled offering across group and voluntary, allowing us to deliver greater flexibility and value to our clients. Taken together, these results reflect strong execution across the enterprise and position us to carry meaningful momentum into 2026.

Turning to Slide 6. I'd like to spend a moment discussing our strategic approach to growing wealth management, where we're making key investments that strengthen our core offerings and create value across the Voya enterprise. Today's customers are looking for support with a wide range of financial decisions and employers increasingly see financial guidance as a way to strengthen employees' financial readiness. Voya is uniquely positioned to meet those needs, building on an already solid foundation with solutions that address the growing demand for advice and planning. This is already a significant business for us with 20% year-over-year sales growth in 2025 and total client assets reaching approximately $35 billion through the third quarter.

We believe now is the time to scale this business and accelerate growth. For example, our field and phone-based adviser network includes nearly 500 advisers, and we're on track to add more than 100 by year-end at our new Boston Wealth Management Hub. We launched WealthPath, our integrated technology platform that will enable advisers to deliver comprehensive guidance and solutions at scale. And we're investing in enhanced digital self-service capabilities which will give clients more flexibility and control. As we expand our adviser base, we will continue to partner with independent advisers to complement our in-house distribution team.

In summary, we're well positioned to serve our nearly 20 million Workplace customers, both to and through retirement, in a fast-growing market that plays to our enterprise strength. Our performance and momentum this quarter and throughout the year, reinforce our confidence in delivering on our full year targets and advancing our long-term strategy.

With that, I'll turn it over to Mike to walk through the financials in more detail. Mike?

Thank you, Heather. We delivered another quarter of strong results, building on our successes throughout this year. We generated adjusted operating earnings of $2.45 per share, a nearly 30% increase year-over-year. This was driven by earnings growth across all business segments and highlights the continued progress we are making on our near-term strategic priorities. Earnings growth also drove excess capital generation of over $200 million in the quarter. Items reducing net income were primarily noncash and largely related to business exit.

Turning to retirement. We generated $261 million in adjusted operating earnings. This is a 24% increase year-over-year and a 20% increase on a trailing 12-month basis. Notably, we are ahead of the expected revenue and earnings contribution from OneAmerica. Margins remain above our long-term targets given continued commercial momentum, driving higher fee income, strong spread income supported by active management of our general account and prudent management of our spend.

Turning to net flows. In addition to the $60 billion of assets acquired from OneAmerica, we have generated approximately $30 billion of organic defined contribution net inflows year-to-date. Third quarter outflows primarily reflected one large recordkeeping plan which we signaled last quarter. Full service outflows were impacted by the anticipated lapses from OneAmerica and the effect of strong equity markets. Importantly, Surrender rates were in line with our expectations and are consistent with prior year. Looking ahead to 2026, we expect margins to return to the midpoint of our 35% to 39% target range. This is intentional as we increase our strategic investments in Wealth Management, which we expect will power long-term profitable growth. As Heather mentioned, our targeted investments in Wealth Management have supported a 20% increase in sales year-over-year. Investments next year will help further scale the business by adding talented advisers, expanding our product line and enhancing our technology capabilities.

Turning to Investment Management. We continue to deliver strong investment performance and drive robust flows across an increasingly diversified platform. We generated $62 million in adjusted operating earnings in the quarter. This is a 13% increase year-over-year and a 15% increase on a trailing 12-month basis. Organic growth at attractive margins and disciplined expense management drove the result. We generated nearly $4 billion in net flows, bringing year-to-date net flows to over $13 billion. This represents organic growth of over 4%, well above our long-term target of 2%. Our successes are broad-based with positive retail and institutional flows, both in the U.S. and internationally, with an institutional several large insurance mandates drove positive flows in the quarter. We now serve over 80 insurance clients and manage approximately $100 billion in assets in the insurance channel. And our capabilities in core fixed income, multi-sector and investment-grade credit remain in high demand.

Within retail, we generated $300 million of positive flows resulting in year-to-date net inflows of over $3 billion. Looking ahead, we remain laser-focused on delivering long-term value for our clients through excellent investment performance.

Turning to Employee Benefits. We generated $47 million in adjusted operating earnings in the quarter. This was primarily driven by favorable group life claims and prudent management of spend. In Stop Loss, a reinsurance recoverable drove the favorable result as we maintain reserve levels across all cohorts. As a reminder, the fourth quarter will bring significant credibility to our claims experience. We expect the credibility of our January 2025 cohort to double in fourth quarter from approximately 1/3 complete to 2/3 complete. That experience will better inform ultimate loss ratios.

In addition to our prudent approach to setting reserves, we are actively pricing and underwriting January 2026 business. Our strategy for that business is unchanged. We are prioritizing margin improvement over in-force premium growth. In group life, experience was favorable, driven by better-than-expected frequency of claims. In voluntary, Paid claims experience was as expected. The loss ratio includes IBNR in anticipation of higher seasonal claims in the fourth quarter as planned. Finally, we are on plan and ready to deliver our end-to-end lead management capability on January 1. Looking ahead, we will continue to achieve margin improvement while delivering strong value to our customers.

Turning to Slide 12. Third quarter marked another quarter of consistent cash flow generation where we generated over $200 million of excess capital and our return on equity improved to 18%. Year-to-date capital generation is now approximately $600 million and we are well positioned to exceed our $700 million goal. We returned approximately $150 million of capital in the third quarter across share repurchases and dividends. This includes $100 million of share repurchases, and we expect to repurchase another $100 million in the fourth quarter. We ended the third quarter with a healthy balance sheet and approximately $350 million of excess capital. Notably, the fourth quarter will also include higher dividends as we raised dividends per share by over 4%. This builds on our track record of growing our dividend each year as we remain confident in the sustainability of our excess capital generation.

Turning to Slide 13. Year-to-date, our approach to capital allocation has been well balanced between investments in the business, returning capital to shareholders and building up our excess capital position. Our healthy balance sheet positions us well for capital deployment in 2026, where we will continue to prioritize as follows: First, we will continue investing in our business in order to drive long-term profitable growth. Wealth Management stands out as another area where we see a clear strategic advantage to expand our capabilities. Second, we will be opportunistic with strategic M&A, such as retirement roll-ups. The bar is higher given how attractive share repurchases are at our current valuation. Finally, we are committed to measured and consistent capital return. We expect to return between $100 million and $150 million in quarterly dividends and share repurchases throughout 2026, subject to market conditions. Importantly, use of capital will be disciplined and evaluated relative to our weighted average cost of capital. Opportunities with longer breakeven or more execution risk will be assessed with a higher bar.

Our 2025 results established a disciplined framework for how we deploy capital. We'll carry that same approach into 2026 focused on driving long-term value for our stakeholders.

I'll now turn it back to Heather before taking your questions.

Thanks, Mike. Turning to Slide 14. This quarter, we continued to make progress, delivering solid results across all of our business segments. Our near-term priorities remain consistent, driving strong profitable growth in Retirement and Investment Management, successfully integrating OneAmerica to drive higher earnings, and continuing to improve margins and employee benefits. Looking ahead, we have commercial momentum, financial strength and strategic focus to drive long-term profitable growth. Thank you to the Voya team for your dedication and hard work in supporting our strategy and delivering for our customers.

With that, I'll turn it over to the operator so we can take your questions.

[Operator Instructions] Our first question comes from Elyse Greenspan with Wells Fargo.

My first question, I was hoping just to get some color on the size of the Wealth Management investment that you're pegging for 2026?

Elyse, it's Mike. So as we look into next year, what we're expecting to use is up to $75 million of our excess capital on Wealth Management, I would think roughly 2/3 of that from a GAAP perspective. We are making some investments in technology, so we'll be capitalizing some of those investments and those will amortize in over time. Now I would expect us to be a little more back half weighted because a large part of those investments is in adding advisers who we expect over time to drive additional revenue. And what's important about that is that it really shortens up the breakeven of these investments. We really like the return profile of Wealth Management and not only from a return perspective, but also what it does for our customers. Finally, what I'd say, Elyse, is we do this from a position of strength. We're ahead of plan this year. We've been disciplined with our spend, and this really gives us an opportunity to lean in to an area of strategic advantage for Voya.

And Elyse, it's Heather. Maybe two other points I would add to it is to be very specific. Our Wealth Management strategy is organic. We're not looking to do any type of roll-ups in the Wealth Management space, just given the high cost of inorganic options. And we think, as Mike mentioned, we've got a really clear path to be able to execute against that strategy.

And then my second question is just on Stop Loss, going in right to, I guess, 2026. Would you expect, just given pricing, et cetera, for -- would you expect that cohort to get be back at target margins?

So Elyse, let me just step back on Stop Loss, and I'll answer your question around just how we see 2026. So first, I'll mention that the reserve levels are firming up for the 2024 cohorts. That's especially true for January 2024, which we view as very close to complete. For the January 2025 cohort, we are now beginning to leverage claims experience to help inform reserve levels. Now this is different than the first and second quarter when we were really fully relying on the pricing, the risk selection to inform that 87% pick. With respect to what we're seeing in the claims experience, very consistent themes to last year, with respect to higher frequency related to cancer and younger ages. We continue to see that. Higher severity with cell and gene therapy drugs. We continue to see those elements as key drivers of claims.

Now I would note, and this affects kind of your question that we are actively leveraging the experience this year to inform underwriting in 2026. It's still very early in the claims cycle. I mentioned that in my remarks. Claims experience is consistent with our reserve levels. And again, the fourth quarter is really important as our credibility doubles heading into next year. And like the industry is seeing, we are continuing to see health care costs change at a rapid pace. But we also give you sensitivities to current reserve levels for the January 2025 cohort, 1% change in loss ratio is approximately $12 million. So at least as we get deeper into the year, fourth quarter, we'll have a better sense of where we think things are for Jan '26. But importantly, while the health care backdrop is not different this year, perhaps even more challenged. What is different is the actions we have taken on pricing, the actions we've taken on risk selection and how we are reserving for this product line throughout 2025, and you should expect the same in the foreseeable future.

Our next question is from Joel Hurwitz with Dowling & Partners.

I wanted to follow up on Stop Loss there, Mike. Any way you could quantify how much reserves are left on the 2024 block? And then in terms of the January '25 block, any way you could actually quantify the incurred claims experience through the first 9 months relative to where the January '24 block was running at the same period of time?

Joel, yes. And just like I was saying, we're pretty close to complete in January 2024. Possible, obviously, the claims can be reported late in the cycle. So we'll be patient around that. With respect to just how we're seeing experience in 2025 relative to 2024, we are seeing modestly better claims experience in January '25 versus where we were in January '24 through October. But I would just be incredibly clear that we really need to see the fourth quarter. We've only got about 1/3 of the experience coming in at this point. And so -- while we are encouraged by that, we really want to see the next 1/3 of that experience come in. And frankly, we'll want to see the first quarter as well to get a sense of where this is ultimately going to land.

All right. Got you. That's helpful. And then back to Wealth Management. I appreciate the color on the expected investment spend in the '26 retirement margin outlook. But I guess any more color you can provide on the expected revenue contributions from that business and how you're projecting that to emerge over time?

Joel, it's Heather. Let me start and then I'll toss it to Jay. We think that '26 is going to be a bit more of a build as we're hiring the advisers and investing in technology. And I would expect think about the revenue emerging, growing in '27 and beyond, again, we're going to come back and give more specifics as we look into '26. But let me turn it to Jay to talk a little bit more -- give you a little more color about exactly what we're doing in Wealth Management.

It's great. Joel, thanks for the question. Just as a step back, if you think about our Wealth Management business today, it's focused on the Workplace, very much aligned to our Workplace strategy, where we're serving close to 20 million customers today. But we're scaling from a strong foundation, as you heard in some of the earlier comments, we currently have 500 advisers. Most of those advisers, Joel, are focused on the strong tax-exempt business we have, but we see an additional opportunity to serve our growing large corporate customers. The demand right now that we're seeing in the -- with financial planning advice in the Workplace is outpacing supply. So we see that our approach is very much complementary to the advice that our intermediaries are providing today. There is a gap in between the supply and the demand. And so the focus for us remains on hiring additional field and phone-based advisers. We're currently enhancing our technology capabilities, specifically to support our adviser platform.

We are working on a customer digital self-service platform and the needs to support our growing segment of customers that are looking to self-direct. And we're partnering with Matt's Investment Management business to deliver a comprehensive suite of retail products. But over the last 9 months, you've seen I've recruited a really highly experienced leadership team. And right now, they're modernizing the operating environment to ensure that we're built for scale.

Heather mentioned the wealth management hub in Boston, we're finding a lot of count rich wealth management resources in that area, and we're recruiting advisers specifically given our leading position as a Workplace provider of retirement and employee benefit solutions. But Heather mentioned in the opening remarks, we're already seeing 20% growth year-over-year in sales. Our retail AUM numbers at $35 billion or up from $31 billion last year. But we're going to remain focused on accelerating growth in this Wealth Management business. There is tight alignment with Amy's Retirement business, Andrew's Employee Benefits business and working with Matt and Voya investment management, more to come on where we're seeing growth in terms of specific numbers for next year, but really happy with the development so far.

Our next question is from Ryan Krueger with KBW.

Can you give some more color on the higher corporate expenses in both the third quarter and the fourth quarter? I know you cited performance-related compensation for the fourth quarter, but I guess I was a bit surprised by the magnitude of that for the size of your company. So -- and I guess just related to that, is the prior run rate corporate loss that you had talked about still a good expectation beyond this year? And is this really more of a onetime impact?

Ryan, it's Mike. So maybe first, I would say that we are having a strong year. You can see that in the results in the first, second and third quarter. And frankly, that is the key driver when you look at third to fourth quarter, we are expecting that incentive compensation accruals will be higher in the fourth quarter due to that strong performance. The only other piece I would call out is that in the second half of this year, you're seeing a little bit more interest expense related to the PCAPs. And I think, Ryan, you're pretty familiar with preferred stock dividends that go up and down each quarter. So beyond that, nothing different to call out from corporate. Obviously, next year, we'll reset targets, and we'll get back to a normal run rate on corporate and we'll see how the performance plays out.

Okay. And then on inorganic, are you mostly interested in things that would be similar in nature to the OneAmerica deal? Or is -- I guess, is your interest broader and would span across all of your businesses potentially?

Yes, Ryan, it's Heather. Thanks for the question. Yes, for inorganic, we're really targeting additional roll-up retirement opportunities. We think that OneAmerica has turned out very, very well, highly accretive for us. And as you heard us talk about in our comments, exceeding the revenue and earnings expectations for the year. So we are most attracted to additional retirement rollouts that we can integrate. It also links very nicely to the Wealth Management opportunity that Jay talked about is, as we continue to grow our participant base and AUM and retirement, it creates a larger base of customers from which we can expand Wealth Management. And we are also looking for retirement books to potentially have a general account or more full service profile that also allow us to leverage the complementary nature of our business, where if we can grow with general account assets, it allows us to leverage mass investment management capabilities. And so just really takes advantage of the complementary nature of our businesses.

Our next question is from Tom Gallagher with Evercore ISI.

A couple of questions on the Wealth business. So for the additional spend in '26, is the hiring there? I heard the comment about hiring advisers. Is that advisers to support your DC plans more like customer service orientation? Or are we talking about hiring advisers to capture rollovers? So is this like a servicing question? Or is it capturing of rollovers? How should we think about that? That's my first question.

Sure, Tom. Thanks for the question. I think the way you should think about this is both our Retirement and our Employee Benefits business, the plan sponsors and employers today, they see a gap in terms of the financial advice that their employees and participants are getting to be able to save for retirement, whether it be their financial or health-related needs. And so there's a gap right now. And we have been in active conversations with those plan sponsors and those employers. And so you should think about this in two ways. One, we're going to bring field-based advisers to the Workplace. We're going to provide financial advice seminars. Those seminars are going to produce interest from our active participants and employees. And from there, our segmentation strategy continues. There's going to be a portion of our customer base, who doesn't have a sophisticated financial plan that's going to result in a need to talk to a face-to-face adviser, our sales desk is going to be there to support them, credentialed licensed, team-based advisers.

We're also building a digital cell service engine, where our -- there's a segment of our customer base that wants a self-direct -- self-direct brokerage, move cash. So you should think about this in terms of proactively covering our customer base and reactively covering the calls that are going to be generated from our continued advancement in our product suite and our distribution breadth. Again, very complementary to the intermediary relationships that are in market today, providing that support. There's just a big gap.

More to come as we build, but you should think about this very much in heavy recruiting. We're not going out and buying teams of advisers. We're having and finding a lot of success organically recruiting advisers in the field, and we're finding a tremendous amount of success in Boston and recruiting a sales desk.

Yes. And Tom, maybe just to explicitly answer your questions, we do see rollovers as an important opportunity for this strategy. We've talked about today within our tax-exempt business, where we have close to 500 advisers. We have a very successful rollover recapture rate in that business of between 15% and 20%. So really this build-out is to be able to serve the broader clients across both retirement and employee benefits. But we do see improvements in rollovers as a key metric.

And then just a follow-up. The -- so the shock lapses from OneAmerica, I saw the guide for Q4. How do you think about that heading into '26? Are we going to see some continued spill over, maybe somewhat higher surrender activity? Or how do you see that trending?

Yes, sure. Again, I appreciate the question. OneAmerica right now, it's delivering a higher revenue and earnings and it's contributing overall our cash generation. The integration you think about for OneAmerica will be complete in the first half of '26. So to answer your direct question, OneAmerica, today, our flows reflect anticipated lapses from the OneAmerica book, as well as we're seeing strong equity markets, and that tends to lead to an increase in account values, which then leads to elevated surrenders.

Importantly, if you think about the total DC book, full service and overall retention really sits into the 90s, high 90s for full service and in the 90s for the overall book. So the activity remains constructive for the remainder of the year and just getting back to OneAmerica really reflecting in line what our anticipated lapses would be through the integration.

Our next question is from Suneet Kamath with Jefferies.

I wanted to start on the capital return in the $100 million to $150 million guide per quarter for '26. Should we view that as sort of '26 stand-alone and then we kind of bump up in '27 as you don't have the Wealth Management investment anymore, and then you don't have the OneAmerica [ 160 ] payment? Or are you signaling that this is more of a run rate that we should expect going forward?

Suneet, it's Mike. No, we're not trying to signal that, that's a run rate beyond 2026. This is really how we're thinking about 2026. And it's considering a handful of things. We come out of the third quarter with $350 million of excess capital. As a reminder, we do have an earnout OneAmerica and we entered the fourth quarter well positioned to handle that in the middle of next year. As Heather talked about, we have an opportunity now where we are with the integration with OneAmerica to kind of lift our heads up and say, "Hey, are there other roll-ups out there that meet our return thresholds?" But we have flexibility. We're guiding to consistent and measured share repurchases this year. We think that's the right outcome. And when we look at 2025, we see that as a great example of when we're using excess capital in a balanced way. It enhances shareholder returns that we see the same opportunity in '26. We just talked about Wealth Management. You should expect us to be very disciplined in how we approach that. Investments must meet our return thresholds. And frankly, we have a higher bar based on where we're trading right now.

Yes. And Suneet, maybe two points I would add to Mike's comments is, we think we've got a very clear enterprise growth strategy that's going to allow us to drive profitable long-term growth across our businesses in the coming years as well as ongoing growth in cash generation, which gives us flexibility in terms of how we think about deploying it. But we do believe it's important to be able to provide consistency shareholders in terms of what to expect for '26.

Okay. Got it. And my second question, I guess, is maybe more of an observation than a question. But when I hear you talk about a Wealth Management strategy that's built around seminars at companies, it takes me back to one of your competitors a couple of years ago that talked about this from a financial wellness perspective and spent like half an Investor Day on it. And it they don't really talk about it anymore. It didn't really turn into much of anything. So I guess it's important that we get metrics at some point, and I'm sure you'll give them to us, but just wanted to highlight this, that kind of show the progress that you're making against this, especially if the spend is $75 million a year and potentially higher going forward. So I just wanted to put that out there.

Yes, Suneet, thank you. We appreciate the feedback. And that certainly is our intention is we want to be able to provide clear progress on how we're measuring success. That's why we wanted to point to some of the revenue growth we're seeing year-over-year just in terms of the sales. But we hear you loud and clear. And I think maybe what's different for us is this is from an established base. When we talk about the $35 billion of assets under management today is contributing roughly 10% of our retirement revenues and growing. And so again, here you loud and clear, and you can certainly expect to see some proof points from us.

Our next question is from Alex Scott with Barclays.

I wanted to follow up on some of the investments. I know you're talking about some of the wealth advisers you're bringing on, but I think you also mentioned that there's some investment in technology. I just wanted to understand how we should think about the impact of these things on the operating margin in retirement business or elsewhere if it goes in other segments?

Yes. Let me let -- Alex, I'll let Mike take the impact on operating margin and Jay can talk a little bit more explicitly about the investments.

Yes, Alex, we're giving a sense right now. And I just would emphasize that we see this as an opportunity where we're doing that from a position of strength given the results, not only just in retirement, but across the board at Voya. We did mention that we expect this to be approximately a 200 basis point implication on margins next year. However, we're right in the middle of our budget season. And so we'll be more precise with that as we get into next year. But that's high-level thinking and very consistent with what I shared earlier in the Q&A with respect to how much we expect to deploy both from a capital perspective, but also from a GAAP perspective.

Sure, Alex. Maybe just as a follow-up on the strategic nature of where those investments are going. We've upgraded our advisory platform, our wealth path, which we've rolled out in October. And that's really to help our advisers really help them from the perspective of account openings all the way through the financial planning tools that they're using. It's really helping to modernize that environment to connect to more customers and do it in a more automated basis.

Secondly, reference to digital self-service. We've got a growing portion of our customer base that wants to self-direct. And so we're going to meet that growing need, particularly with wealth transfer is going. There's a segment of our population, our customer base that's going to inherit a tremendous amount of wealth over the next decade, and we want to be positioned to ensure that they can direct and have a financial planning environment that works for them. So these tools are going to be helpful as we grow into that customer base as well, but very targeted.

Got it. And then maybe if I could pivot over to employee benefits. Could you talk about top line implications from just the lead management rollout. And maybe anything on Benefitfocus, I think just around open enrollment period, would be interested if that's going to have any influence on top line?

Sure. Maybe I'll start on for your first question. So appreciate the question. We're on plan right now to deliver the lease technology as well as a fit-for-purpose operating model supporting a Jan '26 launch. What we're developing right now is a full-service lead product suite. It's going to help build a moat around our other employee benefits business. As you think about this today, this is a critically important capability in the market, and it's leading to a ton of growth. In last quarter Q3, over 50% of all of our RFPs that came in were requiring a lead management bundled solution. So we're really encouraged with the commercial momentum.

In fact, one of the key metrics that we look is getting on the panels of our brokers, and we've been successful in getting on most of our broker panels, and it's led to sales that have already occurred for -- '26. So today, if you think in terms of where we are in happy with where the build is on the technology side, our operating model is in place, and we're getting commercial momentum in terms of our sales.

Maybe on Benefitfocus, we like the strategic capability of Benefitfocus. I mean, it fits really well into the broader employee benefits business. Specifically, as we deliver on our capability road map, Andrew and team are driving efficiencies and are focusing on margin expansion while they do that. Two areas of growth you should think about for Benefitfocus. One is in ICRA. The health plan business side of our Benefitfocus is going to benefit from some of the health care legislative environment that's changing, particularly around ICRA. We've got a plan to go after that market. We're set up well. And in '26, we should be executing against that.

We also see direct synergies with our Benefits Administration business. So -- if you think about that tied to wealth management, we've got a growing customer demand for retail financial advice, and this is going to be another area of synergy for our Wealth Management business. So ICRA and Wealth Management on the top line with efficiencies that we've been building over the course of the last couple of years in Benefitfocus.

Our next question is from Wes Carmichael with Autonomous Research.

First question on Investment Management. And just looking at institutional, I think flows pretty strong in the quarter and maybe a little bit of elevation on the outflow side, but just hoping you could unpack what you saw in the quarter? And maybe any help on the outlook for flows going forward would be helpful.

Yes, Wes, this is Matt. Thanks for the question. Overarching, we like the breadth of flows we've seen across the channels and products for the year. The year-to-date flows, as Mike referenced, $13.4 billion, roughly 4% organic growth rate. Within institutional, $9.7 billion of that on the year, and that's driven by the Insurance business, CLOs, public and private fixed income doing well, also private equity secondaries. So we like the breadth within institutional year-to-date 3.7 in retail. And again, income and growth franchise and multi-asset in the U.S. So we like the breadth.

Within the quarter specifically and more to your direct question, the $3.9 billion number in the third quarter, very happy with another strong quarter. And institutional, the majority of that $3.6 million, driven by a few large insurance wins. So it's a bit more concentrated in the quarter, but I think important to hear that within the construct of the broader year flows.

You're right. It's a good call out the higher level of activity in Institutional, you see in the supplement. We're very happy with the $3.6 billion net. You've got more wins, and you've had some more outflows. Some of those outflows are tied to natural maturities in our CLO business, bank loan mandates as well as end of life in private funds. And there's also some rotation in international equities out of one style into another. So you do see that higher amount of in and out. But again, the net very happy with the $3.6 billion on the quarter. And then looking forward, in the fourth quarter, we expect those to be more muted than the strong third quarter after some strong realizations in the third quarter.

Longer term, we see no reason to pivot away from that 2-plus percent longer-term organic growth rate assumption and we like the commercial momentum we have in the business. And I view it as a testament to the strong investment performance that we've called out 74% outperformance Republic strategies over 5 and a really strong 84% over 10. We're delivering for our clients and growth is the outcome of that.

Our next question is from Wilma Burdis with Raymond James.

Could you quantify Voya's floating rate exposure? I know that, that's something that could impact earnings a little bit in 4Q with the rate cuts. So if you could just help us with that.

It's Mike. So just when we think about floaters, a little less than $1.5 billion of floaters. That's embedded in the overall sensitivity that we share in the investor presentation. So maybe a modest impact we would expect from the effect of the short end coming down. We do -- when we do think about our sensitivities, I would call out that the net effect for Voya is smaller to a shot down in the yield curve as we have offsets in the investment management business related to fixed income asset levels. And I'd also say, like this sensitivities went up a little bit this year. We talked about that in Q1 with the acquisition of OneAmerica, but the team is doing a nice job of actively managing the general account. And I think that's helped us to kind of stabilize what is kind of the raw effect of what's happening with rates.

Okay. And then do you expect any additional reinsurance recoverables on Stop Loss to flow through over the coming quarters? And maybe just talk about the likelihood and timing of that.

Wilma, it's Mike again. Yes, so this is a bit of a idiosyncratic quarter with respect to us calling that out. It's a natural part of the Stop Loss business. We've talked about the fact that from a deductible perspective, we usually kick in the $200,000 to $300,000 range. We'll cover our clients. And then we have excess loss reinsurance above $5 million. And that -- and that's where we saw a kick in from our reinsurer that really was the only effect in the quarter. And so I wouldn't expect that if you're looking at necessarily forward-looking expectations on loss ratios, if there's something significant in a quarter, we're going to call it out, but I wouldn't use that as anything that would be sustainable per se and the outlook for Stop Loss.

Our next question is from Kenneth Lee with RBC Capital Markets.

Just one for me. Within the general account portfolio, I wonder if you could just remind us again what's within the private credit allocation sleeve there?

Ken, yes, it's Matt. Let me unpack that a little bit for you. So overall, the portfolio continues to be very high quality. And we continue to include a slide in the deck, it's Page 27, breaking down the quality of the portfolio. Importantly, 96% of the general account is investment grade. And private credit as 23% of that, of course, has a heavy bias towards investment grade as well, that's 94%. We provided a footnote on that page to give you some further detail there. So NAIC-1s and 2s, 94% of portfolio. Think about those as driving that 50 to 100 basis point yield advantage versus public. So over a long period of time with roughly double recoveries driven by stronger covenants should there be any credit issues.

I mean overall, I think credit markets are performing quite well. As you can see, credit markets are near all-time tights. The term private credit has gotten a lot of attention, as you referenced, but that covers a broad array. And our portfolio is heavily focused on the investment-grade lending area. And this area is, of course, not new to the insurance industry, not new to us. And one that has generated very attractive yields with less downside risk over multiple decades. And so very different than some of the headline news you'll see around bank lending. Syndicated loans or middle market lending, it's a different market segment, and we feel very well positioned with how the portfolio is performing.

Our final question is from John Barnidge with Piper Sandler.

And my first question, could you talk about the Edward Jones partnership that was mentioned earlier this year, success so far in plans for ahead?

Yes, we'll have Jay take that, and it continues to be one of the other important attributes of OneAmerica, which as we've talked about, John, has been just a great integration and opportunity for us to generate value. But Jay?

Great. Appreciate the question, John. If you think about that OneAmerica acquisition, as Heather said, it's not only producing strong earnings and revenue, but the distribution relationships that came along with that business it really is a key value-creating lever for our team. And so Edward Jones is an example of that. Right now, we remain on track for the Edward Jones relationship as we head into '26. So specifically, we're working with Edward Jones right now on the migration of the OneAmerica book of business. Our distribution agreement was executed earlier this year, and we're finalizing key technology connections in order to support the full integration.

Our teams from a distribution perspective are actively engaging with each other on market opportunities. Edward Jones sent a press release out on the partnership a few weeks ago. And their advisers are going to be able to offer our full suite of retirement plan tools and services to their clients starting in early fiscal year '26. So if you think about where we are, we're on plan with that. Again, one of the positives we see in these opportunities in retirement roll-ups isn't just the earnings and revenue associated to the existing book, but it's the new distribution opportunities that we acquire as part of that relationship. And this is a great example of that.

My next question you talk about the Blue out partnership plans for product launch and if there are additional alternative asset managers with which you could partner?

Yes, John, maybe just a quick frame before I toss it to both Jay and Matt. But we think this Bull partnership is just one of the many examples of where we can really unlock the synergistic opportunities that exist across our businesses, specifically when we think about Retirement, Wealth Management and Investment Management. But -- Jay?

Sure. Again, thanks for the question, John. Maybe just to continue with what Heather was saying. Matt and I, we're going to be leveraging partnerships going forward as we think about our growth strategy this Blue aisle partnership is going to be a key contributor to that growth. Specifically, our teams are trying to access private investments and innovative solutions to drive retirement outcomes. That's going to be in the DC space. So that's the focus right now on the private investments in innovative solutions. Specifically, we're going to be in market with private credit, alternative credit and nontraded REIT CITs by the end of this year. We're going to start with our AMA business, and we're seeing a ton of interest right now from RIA firms in different pockets, specifically many of them are waiting for where the DOL rule making has happened. And if you know, John, the two areas, the two gates we've got to get through right now. One is on the DOL side, on their rulemaking. And the second is the safe harbor protections that are going to help accelerate the adoption by plan sponsors as the fiduciary.

I'm going to turn it over to Matt to give a little bit more color on how his investment management business is partnering with Blue But right now, the partnership is on plan for end-of-year rollout.

Yes, John, thanks for the question. Just to build on that a bit, we continue within investment management to work on target date products built from our leading multi-asset team with long and strong track records have been driving our model portfolio growth that we've seen over recent years. And we believe our capabilities pair very nicely with Blue aisle capabilities in their broad array of complementary private strategies.

Importantly, as we build these target date products, the focus is on risk-adjusted returns for our clients as well as attractive returns, net fees. And so we build that product out in partnership with Blue for the second quarter of 2026 time frame for those to come to market, still looking for some clarity on the regulatory side. We do think this is an attractive path forward. And just to expand a bit, you mentioned other private components. We're working with Blue There will be other providers within the structure as well to round out the complete need. We're very excited about Voya and Blue capabilities. We'll supplement that as needed, as we always do in multi-manager products with other partners. And the beyond the DC space, we're very excited about how this ties to our insurance business where we bring our own capabilities as well as those partners like Blue to our broad institutional customer base. So that's a way to think about the growth as well.

Thank you. We have reached the end of our question-and-answer session. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.