Good morning and welcome to the Voya Financial First Quarter 2015 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Darin Arita, Senior Vice President, Investor Relations. Please go ahead.

Thank you, Emily, and good morning, everyone. Welcome to Voya Financial’s first quarter 2015 conference call. A slide presentation for this call is available on our website at investors.voya.com or via the webcast. Turning to Slide 2, on today’s call, we will be making forward-looking statements. Except with respect to historical information, statements made in this conference call constitutes forward-looking statements within the meaning of federal securities laws, including statements relating to trends in the company’s operations and financial results, and the business and the products of the company and its subsidiaries. Voya Financial’s actual results may differ materially from the results anticipated in the forward-looking statements as a result of risks and uncertainties, including those from time-to-time in Voya Financial’s filings with the U.S. Securities and Exchange Commission. Slide 2 also notes that the call today includes non-GAAP financial measures. In particular, all references on this call to ROE, return on equity; ROC, return on capital; or other measures containing those terms are to ongoing business adjusted operating return on equity or return on capital as applicable, which are each non-GAAP financial measures. An explanation of how we calculate these and other non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures can be found in the press release and the quarterly investor supplement available on our website at investors.voya.com Joining me this morning on the call are Rod Martin, Chairman and Chief Executive Officer of Voya Financial; Alain Karaoglan, Chief Operating Officer; and Ewout Steenbergen, Chief Financial Officer. After their prepared remarks, we will take your questions. With that, let’s go to Slide 3, and I will turn the call over to Rod.

Thank you, Darin and good morning. We had a strong first quarter and we're pleased to share our results with you today. Let’s begin on Slide 4 with some key developments. We increased our ROE to 12.6% for the 12 months ended March 31. This improvement reflects the continued execution of our plans. Next the liquidity of our stock increased as ING Group exited its stake in Voya almost two years earlier then it was required. This was a significant milestone in our progress. Voya we’ve made a number of cultural, operational and financial improvements over the past few years with a clear vision and an exciting new brand we will continue to execute on our plans to deliver even greater value for our shareholders and customers. Speaking of value we utilized $631 million in excess capital to repurchase stock during the quarter. Of this $600 million was repurchased directly from ING Group. We continued to believe the share repurchase is an attractive use of our excess capital. With regard to ratings, S&P, Moody's and Fitch, have all upgraded Voya in its operating subsidiaries. We’re pleased that they've recognized the progress we’ve made in strengthening Voya’s financial position. We’ve improved the ongoing business earnings, driven excess capital generation, ensured strong liquidity and strengthened our balance sheet. On May 1, we welcomed Charlie Nelson, to our Leadership Team as our new CEO of Retirement. Charlie has a strong track record of developing and executing profitable growth strategies for retirement businesses. He is well respected across our industry and I’m very pleased to have him on our team. Finally, we continue to build and establish our new brand. As you may have seen, we’ve introduced two new commercials as part of our Orange Money Advertising Campaign. These spots can be seen no…

Thank you, Rod and good morning. As Rod mentioned, the organizational changes we recently made will help our customers and reinforce our value proposition. We have strong businesses, talented leaders and with one a Voya approach, we can bring greater value to our customers and to our shareholders. Our approach will require us to bring the same level of focus that we have demonstrated over the past several years. As you can see on Slide 9, the execution of our margin, growth and capital initiatives continue to drive further improvement in our return on equity and return on capital through the first quarter. Our return on equity was 12.6% for the 12 months ended March 31. That is up 50 basis points from 12.1% for 2014. When you remove items that we do not expect to recur at the same level, our return on equity improved 40 basis points to 12.1% from 11.7%. Our return on capital reached 10.4% for the 12 month ended March 31 and showed improvement similar to the growth we had in return on equity compared with yearend 2014. Moving to retirement on Slide 10, the return on capital was 9.3% for the 12-month ended March 31 or 9% when you adjust for items that we do not expect to recur at the same level. During the first quarter, our record keeping assets under administration declined due to nonrenewal of certain plants. As we noted on previous earnings call, our exit from the defined benefit business and certain nonrenewals will reduce our record keeping fees. This combined with initiatives to spur future earnings growth would likely cause our retirement's return on capital to remain roughly flat in 2015. That said, we have also won and renewed several clients in the large institutional market. In our record…

Thank you, Alain and good morning, everyone. Today I will discuss our financial performance for the first quarter of 2015 and key drivers. Slide 16, you can see the items that affected our first quarter results relative to the fourth quarter where [indiscernible] was impacted by lower record keeping fee income, reflecting our decision to exit the defined benefits administration business and to not renew certain plans. Annuities was affected by lower alternative income. In Investment Management, higher investment capital results offset lower seasonal performance fees. Individual Life benefitted from higher prepayment income, but encountered slightly elevated mortality relative to expectations. And Employee Benefits, the loss ratios for Group Life and Stop Loss continue to benefit from favorable claims development relative to expectations. Also Stop Loss sales were seasonally higher due to the January renewal cycle. Prepayment income was higher than expected and was lower sequentially for retirement and annuities. Looking ahead we would like to discuss administrative expenses for our ongoing business. We expect a slight decrease for the remaining quarters of the year relative to the first quarter of 2015. The decrease in seasonal expenses will be partially offset by expenses that will continue to support new business growth. We still expect to maintain our ongoing business ROE in 2015 at a level generally consistent with 2014 based on incremental investment spend of $50 million this year as we announced in February. We will provide a further update at our Investor Day in June as we explore accelerating the initial timing of our investment projects in 2015. As we incur expenses related to our $300 million to $350 million investment program, we will report this progress to you and we plan to do so in our corporate segment to simplify the presentation of our financial reporting. The ongoing…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question is from Ryan Krueger of KBW. Please go ahead.

Thanks, good morning. I wanted to follow-up on something Ewout said in the prepared remarks just to make sure, I have this correct. So you’re going to allocate the incremental investment spending cost to the corporate segment, but your comment about the ongoing business ROE still being flat year-over-year would incorporate that impact that it's going to be actually in the corporate segment it includes those expenses, is that accurate?

Good morning, Ryan. Indeed that is accurate. What we've tried to say in the prepared remarks is compared to the guidance we’ve provided in February, the guidance is still the same. As we remember we said that the ROE in 2015 according to our expectations would remain more or less flat with 2014 with two particular affects we’ll see the benefit of the lower effective tax rate and that is offset by those investments according to the new strategic plans. Now we're saying that most likely we’re going to report those investments the $300 million to $350 million over the next four years in the corporate segments, which means that the ROE of the ongoing business will go up based on the effect of the effective tax rate and that’s approximately 50 basis points. But on apples-to-apples comparison with the guidance we’ve provided in February it's still the same as what we told you few months ago. I just would like also to point out one other element, what we will report in terms of investments in the corporate line are those start of investments and developments, investments on the particular initiatives. All the additional expenses with respect to volume, expansion of the organization is staffing and other elements will be reported as operating expenses within our segments, in our business.

Thanks. And then in terms of the -- I guess a related question, would you expect the amount of capital that's allocated to your ongoing businesses to be fairly flat relative to the first quarter amount as we go through the year?

Ryan, that is probably a good thing we can discuss during the Investor Day in June. We're certainly ready to provide more details at that point in time what the plans with respect to our new initiatives will do for the capital position of the ongoing business. As you understand, the whole focus is here on growing the businesses in the healthy way going forward. So that will have a positive effect on the capital base of our businesses. So there will be new business strain to support the growth of the businesses. And we are planning in June to provide you more details on that.

Okay, understood. Thank you.

Our next question is from Suneet Kamath of UBS. Please go ahead.

Hi good morning. I want to go to Slide 23, if I could on the CBVA scenarios, so if I look at scenario 1, minus $1.8 billion as you noted that's a little bit worse than what you showed as last time, but I also noticed that the lapse rate assumption changed. It had been down 10% I think and now it’s down 5%. So if we just held everything apples-to-apples meaning the lap 3 down 10% assumption was used in this analysis, what was the $1.8 billion loss be?

Suneet, thank you very much for pointing that out. We believe that with these assumptions underneath the scenarios provide on Slide 23 we're comparing the outcomes of the scenarios in a similar way as the way how the scenarios have been constructed in previous years. And the reason is that as you might recall in the past, the lapse assumption we have in our models, we're looking at an experienced base of multiple years. Last year in the third quarter of 2014, we updated our lapse assumption and we trued it up to more recent experience. So under these four scenarios we apply Management's best estimate assumptions as we have those assumptions today after all of the updates and because we have a true-up done with respect to lapse assumptions in the third quarter of last year we think a 5% additional stress on top of that is more comparable with the 10% stress we did over the assumptions we used before and again that was more based on the average of the experience over a much longer period of time. So we believe that this is a fair and reasonable comparable year-over-year.

Okay, that makes sense.

I would like to point maybe one thing further out Suneet is if you go to Slide 24 you see that scenario 1 is located completely on the left hand side of the distribution of those sarcastic scenario. In fact if you would look at the sarcastic scenarios, there are only four scenarios out of 1,000. So 0.4% of the distribution that are worse than this particular scenario one. I thought that was maybe an additional piece of information that could be helpful to point out.

No, that’s helpful. Unfortunately it's that scenario that we're Ewout but wanted to move to capital in a different way, can you just remind us about your plans for ordinary dividends for this year and then any updated thoughts on extraordinary dividends in the second half?

Let me get you the total overview of our capital plan and dividend plan. What we are intending to do in the next few weeks is to request ordinary dividends in three of our entities at a level of $819 million, which we expect to receive through the holding company later in May. Then we have one of our entities where we will declare ordinary dividends beginning of June that is at a level of $111 million and then we have still remaining $90 million ordinary dividend capacity, which we can take out in December. So in other words, a little bit over $900 million we expect in terms of ordinary dividends over the next few weeks. $500 million of that will be used to repay those intercompany borrowings and then $400 million will become excess liquidity at the holding company. If you look at the excess RBC we had at yearend, we were approximately over $1.5 billion. So you could say a $1 billion of that is capacity in terms of ordinary dividends as I just explained and $500 million is then available that we will try to take out on the basis of extraordinary dividend distributions. What we're planning to do is after we receive the ordinary dividends in May and June to engage in conversations with the regulators to apply for the extraordinary distributions we go through a very constructive process with the regulators. In the past we've always received approval for extraordinary distributions, but this requires discussions with the regulators. So we're planning to do that after the May and June periods and the intention is that we request for extraordinary distributions at the level of $500 million then which we hope to receive in the second half of this year as well.

All right. Got it. Thank you very much.

Our next question is from Thomas Gallagher of Credit Suisse. Please go ahead.

Good morning. Just a follow-up on this unique question. So in terms of the extraordinary dividend, can you comment on whether or not the proposed changes in variable annuity captives potentially throws a ranch into that in terms of what's being proposed, what your view of it and how that might influence an extraordinary dividend?

Good morning, Tom and thank you for this question. Let me first make a few comments about captive accreditation process and then I can specifically answer your question about what will we do with respect to the capital plan for the company. First as you're aware, the NAIC has established a fee issues working group led by Commissioner Gerhart of Iowa and they're going to follow and they are going to follow as we understand a similar process as what the NAIC has done with the AXXX captives working group last year and they will also hire a consultant in a similar way, which we consider a very positive development. We're actively involved by the ACLI and what we expect this is a rational, constructive and thoughtful process and I also would like to comment that it's very rare in the history of the NAIC to introduce new regulation with a retroactive application. The close block variable annuity is already closed for 5.5 years as you know. We're not selling for the last 5.5 years VAs with living benefits. Then with respect to the capital position of the closed block variable annuity, we hold full AG43 reserves, cash flow testing reserves and in fact we have $1.3 billion of additional hard assets. So no LOCs, hard assets over and above that and we also meet the CTE95 requirements for the rating agencies. If we look at the developments with respect to this draft for VA captives and the accreditation, there are lot of uncertainties about the process, timing and implementation, but overall, we believe that the capital position about the close block is strong and it will not influence our plans with respect to our capital distribution going forward. So we will remain focused as Management to generate free cash free flow and to distribute that to our shareholders in the most effective way and we believe that the capital position about the VA block is strong and we're not changing our course with respect to this development.

That's helpful, thanks Ewout. In the unlikely event that it is not grandfathered, I would agree with you based on everything I have seen historically, I can't think of any instances of where in a situation like this it wasn’t grandfathered, but given that there is some uncertainty there, is there a way of thinking through what that would mean? Are we talking about a material capital issue? Was it just a change in hedge program? I just -- it's not clear to me exactly what that would mean?

From the way you can think about this is the following. Overall again in the framework of what I just explained, the capital position in support of CBVA is strong and we believe we have sufficient flexibility to mange through the potential implications of VA captive accreditation what potential we're capturing of this block. We believe that the effects and the impacts could impact our RBC ratio, but overall that would be manageable given the resources we have available. Our concern is not so much about the one time impact on the RBC ratio. Again that is manageable. The impact is that under very extreme economic environment and scenarios, the standard scenario under C3 Phase 2 can become dominant and lead to results and outcomes that do not make sense and what that will mean is a very volatile environment going forward with respect to the RBC ratio and very volatile environment with respect to our hedging program and as you know it's very important for us to be able to run a steady and stable and predictable hedge program on this block. So in another words we are not concerned about the impact of recapturing of the already accreditation itself on our captive, there will be some impact on RBC ratio, but we think it's manageable. The real concern is the full ability that this will bring in the future with respect to our RBC ratio and our hedge program. Again we believe that similarly as what we've done in the past with the NAIC that we're able to entertain a rational and constructive process and that we would be able to find mutual outcomes that work for the regulators and for the industry as well.

That makes sense. Thanks for that answer and then just one follow-up for CBVA, did the updated scenario analysis, the $1.8 billion in the worst case scenario, does this change your view of the timing of release of capital from the CBVA at all? I think Rod when you all at IPO, you talked about five years out is when you could practically expect to start to releasing capital from that block, is that still the case despite the updated analysis?

Tom, yes. Good morning. So the original guidance we gave at the time of the IPO for those new listeners was do not expect a release. So this was kind of a management position of capital from the closed block of our annuity business, sooner than five years. And that was our prudent guidance at that time and that guidance remains in force today. So no change. And if I can just go back to just one other piece of what Ewout said, what he was describing is an industry issue, not a Voya specific issue in terms of the hedging and volatility piece where our concern is. I think you understood that, but for the other listeners I want to just clarify that point.

Yes, thanks for that. And then just one last one if I could. Ewout, did I hear you correctly, you said of the new planned expense initiatives, the $350 million over four years, $50 million should be expected this year, but then it may be accelerated this year. Did I hear you correctly on that?

Tom, that's correct. That's what I said in the prepared remarks and we will provide you an update on this during the June Investor Day.

Okay. Thanks.

Our next question is from Yaron Kinar of Deutsche Bank. Please go ahead.

Good morning, everybody and thanks for taking my questions. first on the ROE path, so I realize that you will hopefully provide more color on the June Investor Day, but if we're talking about some acceleration of the strategic investments into this year, should we also expect an acceleration of the ROE target of 13% to 14% by the end of '18 maybe move that forward as well?

Good morning. It's Rod. We will again as Ewout spoke about giving and others a broad update of the detailed parts of our plan and our overall guidance that we gave in the February call fourth quarter earnings call. We're not prepared to update any further guidance today.

Okay. And maybe one clarification on that, if the strategic expenses are in the corporate and if I understand correctly corporate is not included in the company methodology for reporting ROE then at the end of the day, if we look at the ongoing businesses excluding corporate, should we see I guess what should we think of ROE’s moving to?

Yaron just do you mean for 2015 or do you mean…

Yeah 2015.

So for 2015, what we are expecting as I said before is an ROE that is materially flat and consistent with 2014 which too offsetting elements what we said in the past, but with the expenses and investments for the strategic initiatives in the corporate line. You will see, now the full effect of the effective tax rate on the ROE for the ongoing business. So that is a positive 50 basis points that is now not being offset by those investments anymore because they fall in the corporate line, but again that is just a reporting difference in terms of the economics the results is still the same.

Okay. And then my follow-up question is on the DOL proposal. We’ve heard commentary from few companies on potential impact. I was just curious if you could offer maybe a little additional color on top of what Rod had talked about in the prepared comments, specifically as it would relate to the retirement segment and the potential for either challenges or opportunities that would arise from it?

Sure. Two parts of that, just to maybe reiterate a little bit of what I talked about, this is Rod speaking in the opening comments. I think as you all understand, it is early in the process of reviewing a very highly complex raft and naturally at this point difficult to forecast the structure of the final rules. That’s said, we're confident that our cumulative experience knowhow that we bring to the market will able us to respond quickly to changes in that landscape. We’ve got a long history of innovation and expertise among across all the tax codes and certainly with large institutional experience. In terms of the challenges and opportunities, the challenges as they've been discussed by others, this potential increase in compliance and documentation and reporting are to forecast and predict exactly what there would be. There could be challenges and some opportunities in the sale of rollover products that could be affected. To put that in perspective for us we have $7 billion of AUM relative to the $280 billion of AUM total in this segment. In terms of opportunities, we think we have significant resources and experience to adapt and adapt quickly. We’ve got a potential to engage more directly with customers which is consistent with wanting to serve customers how and where they want to be served. And what you’ll hear much more about at the Investor Meeting in June 2 is the digital experiences that we’re going to be talking about for both customers and distributors. And we think largely as best we can understand the proposal today our full service corporate markets are already aligned largely with proposal that's being introduced and recommend. So I think it's similar to what you’re hearing. It's of high importance to us as it is for the rest of the industry. We’re actively engaged as I spoke about earlier. We think, we've got the right talent on these issues and we will naturally keep you posted and very much give you and others and update on the June 2 meeting.

Okay. Good. I look forward to hearing more about it on June 2 then. Thank you

Our next question is from Eric Berg of RBC. Please go ahead.

Thanks very much. My first question is actually a follow on to Yaron question, the immediately preceding question regarding return on equity because return on equity is by nature an accounting concept and because you have announced today, what I think please correct me if I don’t have this right, is a change in your financial reporting policy moving the corporate -- moving into the corporate expense area or moving into the corporate area expenses that would otherwise have been booked at the operating units. Wouldn’t it be right to say that you are going to be reporting out not a flat ROE this year from your ongoing businesses, but an increased ROE owing to the lower tax rate this year than last year?

Eric, good morning. Let me try to clarify this particular point a bit further. So my first comment would be that this is not a change in our accounting policy or practice. What we're trying to do here is to separate very discreet investment initiatives that do not show a good reflection of the underlying performance of the businesses. If you would allocate those investments to the business segments themselves, then you would see a impact on returns and it will be very hard for you, the analyst community to look through what is really happening with the underlying performance of the businesses. So that’s we're separating out those investments. Again they’re one-time investments. They're only start-up investments and development investments. Everything related to ongoing normalized operational expenses will be in the businesses themselves. So to separate this out, we are able to show you specifically how we're tracking with respect to that overall budget of $300 million to $350 million so that you can use that in your models and allocate it back in a way you think is right and appropriate to reflect the actual performance of the business. So this is just in order to be more transparent, more clear to better show the underlying actual performance of the businesses and in order for you to keep track of how we are progressing with the overall investment at that level of $300 million to $350 million. But this is only for very short period of time. This is only temporary and we're not going to do a permanent accommodation of the corporate segment for these kind of investments. So this is only for that three to four year window.

Thank you. My follow up relates to the CBVA block to management of your capital. You made the decision to bring in Milliman to manage the hedge program and related activities, this management related activities. Well I heard Rod’s comments that there has been no change in the guidance regarding when investor should expect capital to be released from the closed block. What about the possibility that you could accelerate your withdrawal from the variable annuity business by say selling the business or reinsuring part of the business what’s happening with efforts by your team to try to do that and move that presumably would bring the capital closer in time than five years out.

Eric, Rod, good morning, excellent question. All of the activity that has happened and will continue to happen in relation to other potential outcomes for the block are very much still in play. I’ve said in various different ways don’t assume closed block means passive management. We have a significant amount of capital hard assets as Ewout has talked about repeatedly associated with this block. Mike Smith and Christine Dugan and their team are doing a terrific job managing this. We're actively engaged with player in the marketplace with a variety of conversations. As you would expect interest rates and market conditions affect those outcomes. So depending on one's view of where interest rates are going and market conditions that will affect the engagement of those kinds of alternatives. We have said and I'll repeat that we’ve put a substantial amount of hard assets against this and we’re going to do things that make sense economically for all of our stakeholders; our customers, our shareholders are naturally Voya. But that’s said, that wouldn’t in any way Eric be tied to the five years. If we found a solution that was acceptable prior to that point of time, we could make a decision that would correspond with that outcome and we continue to actively look at those pieces and we will update all naturally from time to time in that process.

Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Rod Martin for any closing remarks.

Emily, thank you and thanks to all of you for joining us today. We’re pleased with the results we’ve achieved in the first quarter and we're excited about our plans for future growth. We’ve got a talented team, a clear vision and exciting opportunities before us. We look forward to all of you joining us on June 2 to discuss our plans for further growth in more detail. Thank you and good day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.