WINDSOR — Voya Financial Chairman and CEO Rodney O. Martin Jr. came to the company in 2011 at a critical time, just as it was about to separate from its former Dutch parent, ING Groep N.V., and venture out on its own.
The separation required a rebranding, an initial public offering of stock, a completely new balance sheet, and a strategy to compete with the likes of much larger competitors like Prudential Financial and MetLife. Voya, formerly ING U.S., employs about 2,000 people in Connecticut.
Martin, 62, joined ING U.S. in April 2011 after working at American International Group Inc., or AIG. Martin led the worldwide life insurance business at AIG and he was in charge of divestitures of major subsidiaries as AIG repaid funds it received from the U.S. Treasury through the Trouble Asset Relief Program, or TARP.
During the financial crisis, the U.S. government’s support for AIG totaled about $182 billion — almost $70 billion in TARP funds and $112 billion committed by the Federal Reserve Bank of New York.
Martin led AIG’s sale of American Life Insurance Co. — ALICO — in 2010 to MetLife in a $15.5 billion transaction. The same year, the AIG put its Asian life insurance company, AIA, up for an initial public offering, which raised $17.9 billion. Martin also sold AIG Star Life Insurance Co. and AIG Edison Life Insurance Co., two companies in Japan, to Prudential Financial Inc. for $4.8 billion in early 2011.
It was Martin’s experience leading the initial public offering of AIA and AIG’s divestitures that made Martin attractive to ING Groep N.V., which received a 2008 bailout from the European Union and is required to separate its bank and insurance functions. Martin sat down with The Courant on Thursday.
Q: Your career began in 1975 as an agent with Connecticut Mutual Life Insurance Company, where you worked for 20 years and became president of Connecticut Mutual Insurance Services. How as the public’s appetite for life insurance changed in that time, and why aren’t Gen X and Gen Y consumers buying life insurance the way Baby Boomers and earlier generations did?
Martin: Life insurance purchases have certainly ebbed and flowed over a period of time, and that isn’t terribly surprising to me. One of the ways that we’re addressing it with all groups, so, not just millenials or Gen X or Gen Y, is when we think about retirement readiness … [there are] three components of that in our view. It’s about asset accumulation — saving money; asset protection; and then ultimately asset distribution. …
[The company is using mobile tools and digital tools to help people understand these three aspects of retirement.] In our view, the protection element of being retirement ready is a very important element. … We are very committed to continuing to have a simplified, easy to acquire, product portfolio of life insurance products. …
We, like many, talked about for a long time just a number. In fact, we had an advertising campaign for a long time that was really quite effective about, “Know your number.” … But what we discovered over a period of time was, you take someone that’s like my daughter’s age, so, nearly 30. Talking about a number that’s a half a million dollars or some number like that — it’s very unrelatable to them versus, they know their budget. They know how much money they make a month. And they know much money they might make over a period of time. How much money do they think they need to replace at a point in time when they’re no longer working? [Voya Financial has digital tools that help people figure out how much they’ll have at retirement in various models of saving. “It’s a very effective tool,” Martin said.]
A big part of our strategy is, we want to make our products available how, when and where the consumer wants to acquire it.
Q: Retirement has changed with pensions on the decline and more people investing in 401(k) accounts, 403(b)s or IRAs. And yet the life-insurance research organization LIMRA released a study in June which said 57 percent of middle-market [middle-class] American households are not saving regularly — and 69 percent for households with children under 18 and are not saving. Do you think this is a function of low incomes, under-employment, too much debt, people spending beyond their means, or is it a factor of being too daunted by a big number that people think they can’t reach?
Martin: One of the most daunting financial issues facing American families today is saving for retirement. … It certainly includes all of those things. I think it can be broken down in ways that are made much more easy for customers, mothers and fathers, single individuals to understand. … We’re finding we need to speak in a language that isn’t ‘industry speak.’ It’s a language that is more relatable to a family or individual. People can relate to, “Can I put $100 a month away in a plan, or $50 a month?” … What we’re finding is these tools — our Personal Financial Dashboard, myOrangeMoney and others that we’re putting in place — are helping both educate and inform. …
So, what are the sources of that paycheck in retirement? It’s your personal savings. It may be Social Security. You might or might not have a pension. You probably have a 401(k). We’re trying to demystify this … into ways that people feel actionable and in control.
Q: Is it advantageous to Voya if the U.S. Federal Reserve designates your competitors as Systemically Important Financial Institutions [meaning, too big to fail]?
Martin: There is more unknown information today than there is known about where the government is going to land on the regulation, and what that ultimately will mean for the amount of capital that one has to have to hold for reserves for various products and services. …
It’s too premature in my view to simply say there is a huge advantage for those that aren’t, or disadvantage for those that are [designated ‘too big to fail’] …
The U.S. presently, as you well know, is regulated by 50 different states, but there is no question that the federal government is also going to play an increasing role in the oversight. It’s uncertain and unclear in what way that is going to play out. As we prepared our balance sheet, we certainly very much have kept that in mind. As we’re going forward, I’m sure most of our competitors have done exactly the same.
Q: You were the head of ING U.S. as it separated from its Netherlands-based parent company, ING Groep N.V., and rebranded as Voya Financial. What does the separation mean for the company’s identity and strategy?
Martin: I was brought in to both help develop the strategy, prepare the business and prepare the balance sheet to be public. Just a little over two years and about a month later from April ’11 to May 2, 2013, we introduced the company as a public company. … by all external measures, it’s been very well received. Our market cap has grown by over $4 billion. [The stock is up 75 percent from $20.84 on May 2, 2013, to $36.50 on July 16, 2014]. …
[Retirement is] one of the most daunting challenges facing Americans today, and that’s preparing for retirement. We have market-leading positions. … We’re the second- or third-largest player in that space, depending on how you measure it — by plan participants or by number of plans. … It was very easy to organize around that. We really needed to say, ‘What [are] we going to be going to be?’ And, frankly, what we weren’t going to be. What evolved was, again, our focus of being viewed as, and our aspiration to be recognized as over time, America’s retirement company.
Q: In three different stock offerings, ING Groep’s ownership in Voya Financial has lessened to 43 percent. Why is it significant to the company’s mission that the former parent company is no longer a majority shareholder?
Martin: By the European Union mandate, ING Groep has to divest 100 percent by the end of 2016. That’s a non-negotiable … part of what was put in place by their government to do so. … They’re our largest shareholder, but they’re not a [controlling] shareholder. …
It was, I think, a significant moment for our independent shareholders when they de-consolidated. So, they no longer had control of the company. And not that anything happened in the first year that was anything other than highly supportive. Frankly, having gone through this, [an IPO of a former subsidiary], twice in the last three years, this has gone exceedingly well. I mean, the market cap of the company has gone up $4 billion. The stock has done very well. I think they’ve been very pleased with the outcome, and we’ve been very pleased with the outcome. They know they have to exit. They want to do it on a smart and rational basis.
Q: How have operations changed for employees here in Connecticut, if at all, and how might they change as a result of the separation?
Martin: This is our largest single site, and it has grown certainly since I’ve been here, modestly. [The Retirement Solutions division, largely in Windsor,] represents 60 percent of our earnings. … The fundamental root of this platform dates all the way back to the Aetna transaction, [when ING Groep acquired Aetna Inc.’s financial services division in 2000]. … What resides here fundamentally is our retirement business and a large piece of our asset management business. We draw on a terrific employment base in Connecticut, and I’ve gotten great appreciation from that … We see this site growing over time, not diminishing.